








°o 







-ov^' 


















40^ 


















/ \/*^-r*'y^ %''^:?^-'o^ ^^^-^'V^^^^ ^ 







^-...^^ 









\^,^^ 













.V 









.^" . 










"^n (I'd- 







.^^ 











■f ^^. 





iP-?!, 
















♦^0^ 
^^^x. 




0. 



Digitized by tine Internet Arciiive 
in 2011 witii funding from 
Tine Library of Congress 



Iittp://www.arcliive.org/details/applicationofeff01sliep 



INDUSTRIAL MANAGEMENT LIBRARY 



The Application 

OF 

Efficiency Principles 



BY 

GEORGE H. SHEPARD 




NEW YORK 

THE ENGINEERING MAGAZINE CO. 

1917 






CoPYBIGHT, 1917, BT 

THE ENGINEERING MAGAZINE CO. 



MJ6 ! ! 1317 



©G1,A473084 



PREFACE 

The idea of this book occurred to me nearly five years ago, 
as a result of a conversation with Mr. Charles B. Going, of the 
Engineerifig Magazine (now Industrial Management) in 
which he expressed a wish that some one would tell how to 
apply efficiency principles, as a sort of a supplement to Har- 
rington Emerson's statement of these principles in his book. 

Since then have appeared Arnold's Ford Methods and the 
Ford Shops and Knoeppel 's Installing Efficiency Methods, the 
latter based on a hypothetical but definite case. 

Between Emerson's book on the one hand, and Arnold's 
and Knoeppel 's publications on the other, the manager still 
fails to find exactly what he wants, because Emerson gives 
him an excellent statement of principles but very little about 
how to apply them, while very much of Arnold's and Knoep- 
pel 's specific cases will not fit his needs and he must reason 
from them back to fundamental principles, and from these 
principles work out his own methods. 

It therefore seems to me that there is need for a book which 
should deal with application, rather than with a statement of 
principles; but which should give as general a treatment of 
application as can be made concrete and practical. 

This book is an effort to meet this need. 

I have taken Harrington Emerson 's statement of the prin- 
ciples of efficiency and attempted to show how each of these 
principles can be practically applied. Wherever possible I 
have taken, from my own experience or the work of others, 
practical illustrations of the working of each principle not 
from any particular field but from any field that could furnish 
a definite example demonstrating its application. I have tried 
to analyze these applications back to their fundamental prin- 
ciples in such a manner that the reader can clearly see the 
relation between the principle and its applications. 

My endeavor has been to strike a happy mean between the 



IV PREFACE 

theoretical consideration of efficiency on the one hand and the 
specific description of efficiency application on the other so 
that the reader will, I hope, find its statement of underlying 
theory and illustrating application so clear that he will read- 
ily grasp the possibilities of like application to his own 
problems. 

Our knowledge of any subject of the magnitude of efficiency 
is necessarily the result of the labors of many workers. In 
preparing this book I have freely consulted many other writers 
on the subject. "Where I have drawn from them, I have done so, 
if possible, in the form of direct quotation with acknowledg- 
ment. My only adequate acknowledgment to Harrington Emer- 
son is that of a pupil to a teacher. During three years in his 
organization, I made every effort to learn from him. My 
thanks are also due to Naval Constructor R. M. "Watt, U. S. 
Navy, Industrial Manager of the Norfolk Navy Yard, and to 
Mr. Charles B, Going, for kindly reading and criticising the 
manuscript, and for valuable suggestions. 

George H. Shepard. 



CONTENTS 

PAGE 

Chapter I. The Principles 1 

A Highly Efficient Job Analyzed to Show the Princi- 
ples Involved. The All-Embracing Principle of 
Higher Common Sense. The Principles Restated in 
Simpler Form. Three Primary Principles Defined. 
An Approach to the Problem of Applying Them in 
Practical Work. 

Chapter II. Preliminaries. Troubles 11 

Piece Rates and Rate Cutting. The Fair Deal Es- 
tablished by Determining Standards as a Basis for 
Rates. What May Be Accomplished by Simple Plan- 
ning and Despatching. 

Chapter III. Higher Common Sense 15 

Analyzing a New Job by the Test of the Efficiency 
Principles. Synthesizing the Conclusions. The Test 
of Common Sense. Examples. 

Chapter IV. Ideals 2& 

Their Significance, Effects, and Practical Operation 
Shown by Many Working Examples. How Ideals 
May Be Propagated in an Industrial Organization. 
Their Intimate Connection with the Fair Deal, In- 
struction, Discipline, and Efficiency Reward. 

Chapter V. Personnel 35 

Good Hiring Methods and Bad Ones. Instruction 
and Promotion. Getting the Right Man into the 
Right Place. Keeping Records of Employees. Em- 
ployment Supervisors and the Employment Depart- 
ment. How the Higher Officials May Keep in Touch 
with Conditions and Individuals. Encouraging the 
Efficiency of Employees. Keeping the Best Men. 
Getting the Quickest Results. 



Vl CONTENTS 

PA6B 

Chapter VI. Organization 53 

The Backbone of Organization — ^the "Chain of Com- 
mand." Elements of the Chain of Command. Prac- 
tical Illustrations. Functions of the Officers. Limits 
of Discretion. Influence of the Head. Relations of 
Subordinates. Team Work. The Place of the Spe- 
cialist. Special Staff. Relations of Staff and Line. 
The Organization Diagram. Explanation and Dis- 
cussion. Duties, Responsibilities and Authority of 
the Various Officials Defined. Personnel, and the 
Effects of Personality. Relieving Executives of Bur- 
densome Detail. The Committee System. 

Chapter VII. Records. Planning and Despatching. . 87 

The ''Siamese Twin" Principles of Efficiency. 
Their Intense Practicality. Universally Necessary 
but Need Special Adaptation in Every Case. Why 
Planning is Essential. How It Can Be Started 
Early. The Method Illustrated by a Typical Order. 
The Tickler File and Its Use. Who Need the Infor- 
mation, and What Information They Need. Form 
for Service Card. Analysis of Its Data, Showing 
Items Desired by Paymaster, Cost Accountant and 
Planner.- Officials and Assistants Necessary for 
Planning and Despatching Work. Use of the Des- 
patch Board Explained. Its Practical Working in 
Actual Service Followed Through in Detail, with 
Instructions as to Every Step. 

Chapter VIII, Records. Planning and Despatching 114 
Further Development of the Planning Department. 
Centralized Control of Departmental Planning. Two 
Methods — By Individual Job Orders or by Speci- 
fication of Daily Output. Determining Departmen- 
tal Capacities. Planning for Materials. The Bill of 
Material. The Perpetual Inventory. Fixing Maxi- 
mum and Minimum Stock Limits. Material Requisi- 
tions and Material Service Cards. What Data They 
Contain and How They Are Used. Interpreting the 
Records. Treatment of Delayed Orders. Treatment 
of Damaged Stock. Rejections. Planning for As- 
sembling. The Principle of the "Reservoir," Ulti- 
mate Ideals of Planning. The Advantages Gained. 



CONTENTS Vll 

, PAGE 

Use of Graphs. ; Reports to the Higher Officials, and 
What Each Should Show. Important Records 
Which Are Commonly Lacking. The Cost of Plan- 
ning Compared with the Savings Possible. 

Chapter IX, Adaptation of Conditions and Work to 

Each Other 145 

Adaptation Is Essential to Determining and Main- 
taining Standards. Is Often Called the ' ' Standardi- 
zation of Conditions." Does Not Necessarily Mean 
Blind Uniformity, Being Controlled by the Principle 
of Common Sense. Sometimes Better to Adapt the 
Work to the Conditions than the Conditions to the 
Work. How Preliminary Investigations Are Made. 
OTwenty-four Adaptations of Conditions which Are 
Always Important in Every Plant: Location of 
Plant. Cleanliness and Order. Manufacturing as 
Few Varieties as Possible. Permanence of Type and 
Style of Product. Suitability of Product to Equip- 
ment. Volume of Production Equal to Plant Ca- 
pacity, Orders in Size Suitable to Efficient Manufac- 
turing. Efficient Equipment. Readiness of Equip- 
ment for Use. Routing, Accurate Knowledge of 
Processes. Readiness of Personnel for Service. Di- 
vision of Labor. Safety of Personnel. Ventilation. 
Lighting. Warmth. Work Height, Suitable Work 
and Rest Periods. Suitable Materials. Proper 
Storage, Standardized Location of Stores. Prompt 
and Accurate Inspection. Supply of Material When 
and Where Wanted, Each of These Points Is Fully 
Discussed and Illustrated. 

Chapter X. Standards 198 

The Mere Existence of a Standard Stimulates Effi- 
ciency, Application to Executives. The Influence of a 
Budget Allotment, Rough and Ready Methods That 
Are Often Adequate. Application to Direct Work- 
ers. Time Studies. How They Are Made. Ex- 
amples, with Discussion. Practical Methods of Set- 
ting Standard Times from Time-Study Observations. 
Fatigue, and the Fatigue Diagram. Rules for Fix- 
ing Allowance for Rest. Caution Against Making 
Standard Times Too Severe. The Question of Sep- 



VUl CONTENTS 

PAGE 

arate Standard Times for Set-Ups or Auxiliary- 
Operations. Recognition of the Fair Deal. Increase 
of Output Secured by Allowing Sufficient Rest. Set- 
ting Standards for Waste of Materials. Using 
Standards of Total Cost. Excessive Accuracy is 
Needless, and * ' Good Enough is the Best. ' ' 

Chapter XI. Correct Methods. Instruction ... 249 

Finding Correct Methods by Time Study and by 
Scientific Investigation. Four Conditions Necessary 
to Get the Best Results. Finding Inefficient Ele- 
ments by Analysis and Combining Efficient Ones by 
Synthesis. Co-operation Between Time-Study Man 
and Instructor. Starting the Direct Workers at the 
Improved Method, with Efficiency Reward for Suc- 
cess. What to Do and What Not to Do. Securing 
the Co-operation of the Workers. Jobs Which Will 
Not Pay for Time Study. Relying on the Intelli- 
gence of the Worker. Education and Training of 
Employees. The Great Advisability of Training 
Understudies. Teaching the Men Pays. 

Chapter XII. The Fair Deal 266 

Putting Oneself in the Other Man's Place. "How 
Would I Feel About It?" Fair Dealing from Em- 
ployer to Employee, and from Employee to Employer. 
What We Find in Actual Practice. The Lesson That 
Slavery Does Not Pay Even the Slave Owner. Wel- 
fare Work That Pays Both Proprietor and Work- 
man. What the Fair Deal Is and What It Requires, 
as to Wages and Bonus, Conditions, Treatment of 
Employees, Assignment to Fitting Tasks. Opportu- 
nity for Promotion. The Problem of Gaining the 
Men's Confidence, and the Benefits Gained by the 
Fair Deal. 

Chapter XIII. Discipline 278 

.Obedience to Orders Is the Foundation of Any 
Strong Organization. Ideals May Require Punish- 
ment of the Disobedient. The Martinet Is Not a 
Good Disciplinarian. The Industrial Manager Often 
Hampered by Lack of Minor Penalties for Small 
Offenses. Objections to Fines and Lay-offs. Advan- 
tages of a Demerit System in Providing "Small 



CONTENTS IX 

PAGE 

Change" in Penalties. Its Dependence on a System 
of Records. Discipline to Be Permanent Must Ob- 
serve the Fair Deal. It Is a Natural Function of the 
Employment Supervisor. Building Up a Spirit of 
Loyalty. 

Chapter XIV. Efficiency Reward 286 

In Industry, Rewards Must Generally Be Substan- 
tial. Sentimental Rewards Are Secondary Only. 
The Effects on Cost Must Be Studied Before Any 
System of Rewards Is Adopted. Profit-Sharing Suit- 
able for the Higher Officials. Why It Becomes Less 
Suitable as We Go Down the Chain of Command. 
Forms of Reward Suitable for Managers, Superin- 
tendents, Foremen. Forms of Reward Suitable to 
Direct Workers. Piece Rates with Guaranteed 
Time Rate. Bonus Methods. Difficulties Met When 
They Are First Installed. Fixing the Bonus Period. 
Keeping Records for Bonus. Problems Presented by 
Various Cases Met in Practice. Bonus for Saving 
Materials. Methods That Have Succeeded. Objec- 
tions Raised by the Men, and Means of Overcoming 
Them. When to Begin Putting Men on Bonus. Ad- 
visible to Keep Bonus and Wages Separate. Bonus 
Can Only Stimulate the Workers' Intelligent Inter- 
est and Effort. Maximum Output Depends on Ob- 
servance of All the Other Principles. 

Chapter XV. Determination of Efficiencies 315 

Financial Results Depend not only upon Detecting 
Inefficiencies, but on Knowing Which to Cure First. 
Changing the Efficiency of Any Department Affects 
Many Others. An Analysis Determines the Most 
Effective Point of Attack. We Determine Efficiency 
of Materials, Labor, and Expense, from the Point of 
View of Use, Supply, Price and Distribution. Illus- 
trations and Examples. 

Chapter XVI. Cost Finding 324 

Important to Determine Preliminary Work, and Con- 
tinuously Throughout All Management. A State- 
ment of the Ideals of Cost Finding. Promptness 
with Approximate Accuracy Much More Important 
Than Extreme Exactitude. The Ultimate Purpose 



X CONTENTS 

PAGE! 

is Operation of the Plant on Standard Costs. Rules 
for Adjusting Distribution of Overhead Expense. 
The Cost Diagram, with Explanation and Discus- 
sion. Redistributing Indirect Charges, with Graphic 
Diagram. The Problem of Cost Allotment with Fluc- 
tuating Volume of Output. Use of the Surplus Ac- 
count. Laying Out Cost-Finding Work for an Effi- 
ciency Campaign. 

Chapter XVII. Estimating Financial Results 348 

As Overhead Remains Nearly Constant, Increasing 
Output Lowers Unit Costs. Closer Supervision Adds 
to Expenses, and Labor Must Receive Bonus for In- 
creased Efficiency. Striking the Balance to Deter- 
mine Feasible Net Increase of Profits. An Example 
"Worked Out. Reduction of Selling Price May Be 
Necessary to Absorb Increased Production. The 
Public's Share in the Profits of Efficiency. 

Chapter XVIII. Selection of the Point of Attack 357 
The Solution Found in the Preceding Studies. The 
Work Must Pay for Itself as Soon as Possible. Typi- 
cal Case Examined to Find Where That Would Be. 
Objections to Beginning with Personnel. Frequent 
Advisability of Beginning on Materials. In Any 
Case, Progress Will Soon Be Checked until Some 
Other Department Has Been Brought up in Line 
with That First Attacked. Analogy to the Game of 
Jackstraws. The Solution Usually Lies in Selecting 
Successive Points of Attack, Holding the Gains 
Already Secured, and Concentrating AU Energy 
upon Each New Drive as It Is Made. 



AUTHOR'S ACKNOWLEDGMENT 

Our knowledge of any subject of the magnitude of effi- 
ciency is necessarily the result of the labors of many workers. 

In the preparation of these articles I have freely consulted 
the contributions of others. 

Where I have drawn from them, I have done so in the form 
of direct quotation with accompanying statement of source, 
if possible. In three years with Harrington Emerson 's organi- 
zation, I made every effort to learn from him. My only 
adequate acknowledgment to him is that of a pupil to a 
teacher. 

My thanks are due to Naval Constructor R. M. Watt, 
United States Navy, Industrial Manager of the Norfolk Navy 
Yard, and to Mr. Charles B. Going of the Engineering Maga- 
zine, for kindly reading and criticising the manuscript, and 
for valuable suggestions. 

The Author 



Chapter I 
THE PEINCIPLES 

1. 

T^ FFICIENCY depends upon the application of only 
-^-^ a few principles ; and the analysis of any example 
of high efficiency will reveal all of them in use. The 
plant of the Ford Motor Company is one of the best 
known examples. 

Eeferring to its Commutator Department, Arnold in 
**Ford Methods and the Ford Shops" says, "The com- 
mutator job is regarded by the Ford shop heads as be- 
ing in as nearly satisfactory condition as any depart- 
ment of the entire plant, and the low labor costs therein 
reached, fully warrant the minutely detailed and pro- 
fusely illustrated story here printed. ' ' 

As Arnold summarizes the causes of the high effi- 
ciency of the Commutator Department, I have selected 
his statement for analysis into fundamental princi- 
ples, under one all-embracing principle. Higher Com- 
mon Sense. 

Higher Common Sense 
how ford shops make a commutator in 16 

MINUTES AND 27 SECONDS OP ONE MAN's TIME. 

(1) By minutely dividing labor oper- conditions 
ations. 

Many of the operations are the work of auto- 
matic tools. 

1 



APPLYING EFFICIENCY PEINCIPLES 



Correct 

Methods 

Instruction 



Fair 
Deal 

Adapted 
Conditions 

Discipline 

Correct 
Metliods 

Planning 



Adapted 
Conditions 



Plannlne 



Adapted 
Conditions 



Correct 
Methods 



Minute division of operations is effective in 
labor-cost reducing in two ways ; first by mak- 
ing the workman extremely skillful, so tbat 
he does his part with no needless motions, 
and secondly by training him to perform his 
unvaried operation with the least possible 
expenditure of will-power, and hence with the 
least brain fatigue. 

(2) The work hours are short, 4 hours at 
a stretch only, so that workmen in good form 
can, and do, stand in their tracks, working 
with the regular production of an automatic 
machine. 

(3) "Work-slides, successive-operation men 
and successive-operation tools and appliances, 
are so placed that one man drops a piece 
when his part is done, either where it is ready 
to the next man's hand or where the gravity 
work-slide will carry the piece to the next 
man's ready reach. 

(4) Placing the case foundry on the ma- 
chine floor, close to the machine tools, is a 
very great time saver. Not only is the rough- 
case supply made certain, but the castings are 
perfectly moulded and come to the finishers 
in best possible form, with least possible 
thought, travel, and lai)or, both of the head 
and the workmen. 

(5) All operations requiring heat, melting, 
annealing, hardening and tempering, are per- 
formed in furnaces so located, and so grouped 
where more than one heating is needful, as to 
save all possible time expenditure. 

(6) "While the machine tools used are all 
regular commercial productions, the fixtures 
used with them are most elaborate, carefully 
designed to save movements as far as may 
be, and are well made, so that the workman 
need exercise no care or scrutiny in using 
them. 

(7) In three instances the special tools and 
fixtures used are unusual; the two turret 
machines which produce T-671 have been so 



THE PRINCIPLES 



ingeniously changed as to produce more than 
double the work that could be turned out by 
ordinary handling of a turret machine. 

(8) Constant supervision of workmen, con- 
stant work inspection, and constant watching 
of tool-cuts by the two tool-setters, give skilled 
overlooking to the work of every man on the 
commutator job. Many of the machine hands, 
though not regular machinists, are highly 
skilled and grind and set their own tools. 
Every workman is perfectly aware that he is 
under constant observation, and that his 
supervisors know his work and his pace per- 
fectly, and that he will be admonished if h© 
falls below the fast pace of the department. 

(9) An automatic drill chuck, the "Gronk- 
vist" can be handled more rapidly than any- 
thing ever seen previously by me, and saves 
much time, 

(10) The workmen are suitable for the per- 
formance of their operations, and for their 
environment and working conditions. They 
are docile, and yet the physiologist will seek 
in vain for weak chins and narrow heads in 
the portraits of these workers who are, with- 
out exception, mentally capable of concentra- 
tion and determined effort, having well de- 
fined firm chins, wide jaws and wide heads. 

After reading the foregoing summary of 
Ford labor-cost reducing elements, the Com- 
mutator Department head asserted its cor- 
rectness, but added as follows : 

"I depend largely on my tool-setters for 
my production. The tool-setters know exactly 
what I want, and as long as the tool-setters 
have plenty of newly-sharpened tools on hand, 
all ready to go into the machines as soon as 
tools in use show loss of smooth-cutting edge, 
I have no trouble in keeping my production 
up to the 1750 per 8 hours' mark. But if 
there is even a very small delay in replacing 
a cutting tool, which does not work exactly 
right, trouble begins." 



Discipline 

Organization 

Instruction 



Selected 
Personnel 



Records 
Discipline 



Standards 

Adapted 

Conditions 



Selected 
Personnel 



Organization 

Adapted 
Conditions 



Planning 



Standards 



APPLYING EFFICIENCY PEINCIPLES 



Fair 

Deal 

Sufficiency 

Re-ward 

Ideals 



Undoubtedly this post-script is of first im- 
portance in this 16 minutes and 27 seconds 
achievement. 



Beside the causes stated by Arnold, there are, of 
course, the well-known Ford high wages, bonus and 
general welfare work. 

2. Separating out the principles, they appdar as 
follows : 

Adapted Conditions 
Correct Methods 
Instruction 
Fair Deal 
Discipline 
Planning 
Organization 
Selected Personnel 
Eecords 
Standards 
Efficiency Eeward 
Ideals 



Higher Common* 
Sense 



3. For clearness and convenience of application it 
is desirable to restate the principles in slightly dif- 
ferent form. 

Soon after I took up efficiency work, it became ap- 
parent to me that some few of the principles, like the 
primary colors of the spectrum, potentially contained 
all the rest; but I could not determine for some time 
which these were. In January, 1913, I was sent to 
the Pittsburgh and Lake Erie railroad to collect data 
for the series of articles on that road which. Harring- 
ton Emerson was then writing for The Engineering 
Magazine. I found there a very high efficiency; I 



THE PEINCIPLES O 

also found that only three of the principles had been 
consciously recognized. There was a very ;remarkable 
personnel, scientifically organized, and pursuing cor- 
rect ideals. Personnel, Organization, and Ideals had 
been strongly applied ; and I found that a selected per- 
sonnel, pursuing correct ideals through scientific or- 
ganization, had of itself applied all the other princi- 
ples, for all of the principles were in use. 

These three, therefore, are the primary principles. 
All the colors of the spectrum in a perfect blend make 
white. Similarly, Personnel, Organization, and Ideals 
result in the application of all the principles ; and we 
then get the effect of the great all-inclusive principle, 
Higher Common Sense. 

4. It is to be noted in paragraph 1 of Arnold's state- 
ment how closely Correct Methods and Instruction 
combine with each other. This is typical. Only that 
which is earnestly studied can be well done. Only that 
which is practiced can be thoroughly learned. There- 
fore, Instruction and Correct Methods are inseparable, 
and I have bracketed them together in the statement 
which follows. 

No plan is of any value unless it is continually fol- 
lowed up and enforced. From analogy with railroad 
practice this process has been called Despatching. It 
needs to be emphasized more strongly than would ap- 
pear from the example of the Ford Commutator De- 
partment, and so I have added it to the principle of 
Planning. 

We always desire to adapt conditions to the work to 
be done, but this is not always possible. For example^ 
we can not so adapt the conditions at sea as to make 
commercially profitable the speed of the railway, and 
we are forced to the slower transportation by ship. 



b APPLYING EFFICIENCY PRINCIPLES 

Adaptation must therefore work both ways ; for if we 
cannot adapt the conditions to the work, we must adapt 
the work to the conditions. 

5. The principles can then be restated as follows : 

ALL INCLUSIVE PRIMARY SECONDARY 

Adaptation of Conditions 
and Work to Each Other 
Ideals f Correct Methods 

HiCHFR llnstruction 

xiiGHER -p,^^^ Deal 

Sense'''' Personnel Discipline 

Planning and Despatching 
Eecords 
Organization Standards 

Efficiency Eeward 

The above statement is somewhat modified from 
that of Harrington Emerson, who first stated twelve 
definite principles as the fundamental causes of all 
efficiency.^ This was an astounding feat of analysis 
and a service comparable to analyzing all matter into 
a few chemical elements ; a feat and service for which 
he has not yet received the credit that is justly due 
him. 

6. While all of the principles have a moral aspect, 
this is so pre-eminently true of certain of them that 
they may be called the ethical principles. These are 
Ideals, Fair Deal, Discipline, and Efficiency Reward. 

Emerson has rendered another great service in in- 
sisting inflexibly, and regardless of personal interest, 
upon the ethical principles. He has well pointed out 
that in the voyage of the Titanic all of the ethical 
principles except Discipline were violated; and that 

^"Twelve Principles of Efficiency," by Harrington Emerson; The 
Engineering Magazine Co. 



THE PEINCIPLES / 

the loss of the ship resulted though all of the other 
principles were applied. 

The severest criticisms of efficiency arise from ig- 
norance of the ethical principles. One often reads 
statements that although the immediate economic ef- 
fects may be valuable, the moral effects are always 
harmful, and the ultimate economic effects disastrous. 
If the critic states his reasons, analysis will reveal com- 
plete ignorance of the ethical principles. 

7. In the analysis of the causes of efficiency of the 
commutator department of the Ford plant, the promi- 
nence of Adapted Conditions is noticeable. This re- 
sults from two underlying conditions of the Ford busi- 
ness — making a single article and making it in largCj 
quantities. In other work in which these conditions dd 
not exist. Adaptation, though it would still apply, 
might be of much less importance and might be im- 
possible of anything like such extensive use. 

Every problem has its own peculiarities which result 
in wide differences of methods and devices. Hence, a 
mere statement that such and such things have been 
done in some plant is in itself of very little value. 
One who devotes his efforts to searching such records 
for things which he himself can use, is apt to be like 
the stutterer who practiced ''Pickled peppers" until 
he could say it perfectly; but, as he complained, ''It 
s-s-so s-s-eld-d-dom oc-c-c-c-urs in c-c-c-conversation. " 

On the other hand, every one of the principles listed 
from the above analysis applies to every management 
problem, even if the specific case be as different from 
the Ford plant as that of a hospital, a school, or a 
church. 

8. In an effort one time to increase the efficiency of 
a gang of workmen, I had adapted conditions, had de- 



8 APPLYING EFFICIENCY PRINCIPLES 

termined standards, had planned and despatched their 
work, had installed records, and had applied efficiency 
reward by offering a bonus above their previous time 
rate for any increase in their efficiency. At this point 
I found progress blocked by a violation of the prin- 
ciple of Ideals by the boss, who held that limitation 
of production was necessary for his protection. To 
apply the apparently obvious principle of Instruction 
and teach the economic fallacy of limitation of produc- 
tion would, with most workmen, be useless. Instead, 
the principle of the Fair Deal was applied. Occasion- 
ally the gang would make a good enough efficiency to 
earn a little bonus. Just as soon as they found that 
they had done this, they would drop to a very low 
efficiency. The boss was afraid, in fact, to make a 
good efficiency, because as he told me plainly, he be- 
lieved that as soon as he did so, the bonus would be 
withdrawn and he would be driven to make the same 
efficiency on his bare time rate on pain of losing his 
job. However, the bonus attracted the gang; and 
after a while they would slowly come up to a good 
efficiency, only to slump again as soon as they found 
that they had earned bonus. Their conduct was like 
that of wild animals approaching food while fearing a 
trap. 

Every time the gang earned bonus it was paid them, 
and none of their standards was made more severe. 
On the contrary, a considerable number of standards 
that were found to be too severe were made easier. 
After experiencing this kind of treatment for nearly 
three months, the gang acquired confidence, and there- 
after worked continuously at a high efficiency. Con- 
tinuous practice of the Fair Deal won in the end. 

An alternative course would have been to have ap- 



THE PKINCIPLES 9 

plied the principles of Discipline and Personnel, and 
to have replaced the original gang by men who would 
have been more willing to produce results; but they 
were to some extent justified in their suspicions by 
the fact that the management had at former times 
yielded to the temptation to cut piece rates on which 
it considered that excessive earnings had been made. 
Hence, the Fair Deal required that these men should 
be allowed to satisfy themselves of our good faith in 
their own way. 

9. As in the above case, every one of the principles 
is continually mixing up with all the rest ; so that while 
one is earnestly seeking to apply one, he may at any 
time be confronted by the need for the application of 
others. 

Hence, the only guide through the mazes of efficiency 
work is a knowledge of all the principles. 

To ask the efficiency engineer for a definite state- 
ment of procedure is like asking the navigator what 
course he steers at sea, and as little admits of a gen- 
eral answer. The navigator can, indeed, lay a definite 
course for any voyage, but he does so by applying the 
principles of navigation. So the efficiency engineer 
can define procedure in any situation, but he does so 
by applying the principles of efficiency. 

Also, while a study of any experience in efficiency 
usually yields but little in the way of methods that 
can be directly applied to any other case, the analysis 
of any such experience into the application of funda- 
mental principles, as shown in the case of the Ford 
commutator, will always yield something of value in 
the shape of deeper and more thorough knowledge of 
the principles themselves, and of greater skill in their 
application to any case that may arise. 



10 APPLYING EFFICIENCY PBINCIPLES 

10. Also, as appears in the example cited in para- 
graph 8, the principle which comes first to mind as 
applicable is not always the one that will produce re- 
sults. The only way that errors of this kind can be 
avoided is by the continual study of one's own ex- 
periences and those of others in the light of the prin- 
ciples. The words of Dr. Schurman, ''Practice with- 
out theory is blind, and theory without practice is 
empty," apply strongly to all efficiency work. 

11. Because of the interplay of the principles with 
one another, it is impossible even to discuss any one 
of them without continually bringing in the others. 
Hence it is necessary, before discussing any principle 
in detail, to give a general statement of all of them. 

On the other hand, any general analysis, either of 
theory or practice, 'must proceed in the main along 
the line of one principle at a time. These chapters, 
therefore, resemble in structure Harrington Emer- 
son's work "The Principles of Efficiency" in that they 
discuss each principle in turn; but the point of view 
is different. Emerson's Ideal was the explanation and 
propagation of the principles, while this volume as- 
sumes that the principles are understood and accepted, 
and undertakes to tell how to apply them. 

The efficiency engineer is always steering between 
Scylla and Charybdis. Adherence to one principle 
only, to the neglect of others, is sure to run him into 
trouble one way or the other; but safety and success 
lie in the simultaneous practice of all. 



Chapter II 
PEELIMINARIES. TROUBLES 

12. 

A FOREMAN, who was taking me through a plant 
-^~*- where I was investigating the possibilities of in- 
creasing efficiency, pointed out to me a piece worker, 
and remarked, ' ' I have a hard time to keep that fellow 
from earning two dollars and a half a day." I re- 
plied, ''It would be altogether better if he did earn 
two and a half a day wouldn't it?" ''Oh, no," re- 
plied the foreman. "If he did that, the time clerk 
would come around and say, 'Gee! That's a lot of 
money, isn't it?' Then the office would cut the piece 
rate on that work, and the rest of the men couldn 't 
earn enough and would quit. So, in order to keep from 
losing the rest of my men, I have to watch him and 
bother him enough to keep him from earning two and a 
half a day. If you get a man who will earn too much 
in spite of all you can do, you just have to fire him." 
Considering the above incident, we see at once a 
violation of the principles of — 

The Fair Deal, 
Efficiency Reward, 
Discipline, and 
Common Sense. 

11 



12 APPLYING EFFICIENCY PKINCIPLES 

Following the line of investigation thus suggested, 
I found that the management made a regular practice 
of watching the earnings of its piece workers, and of 
cutting a rate as soon as any one earned more on it 
than was considered the proper time rate for his class 
of labor. 

In consequence of this, the False Ideal of limitation 
of production was so general through the plant that 
superintendents and foremen told their men not to do 
too much. In fact, due to this cause, production was 
about thirty per cent below what it might have been. 

It is evident that the root of the whole trouble was 
the violation of the Fair Deal by the management; 
but the application of the Fair Deal was not the only 
step necessary for correction. Back of that lay the 
fact that there were no proper Standards. Having no 
standards the management had tried to set its piece 
rates by guess, and then to correct errors by cutting 
any rate that appeared to result in excessive earnings. 
This practice is very common, and always results in 
limitation of production by the workers who, realizing 
that they will be allowed to earn only so much, deter- 
mine to get it as easily as possible. 

The necessary steps were to determine standards 
scientifically; then to apply the Fair Deal by sticking 
to them, and Efficiency Reward by paying for good 
efficiency as determined by comparison with them. 

13. Every violation of a principle of efficiency makes 
trouble somewhere ; hence, the troubles in a plant are 
its symptoms of inefficiency and, therefore, of first in- 
terest to the efficiency doctor. Our bodies are so made 
that the least member that is in trouble can apply the 
principle of Records by sending in a sharp and insist- 
ent report in the form of pain, which meets with 



PRELIMINARIES. TROUBLES 13 

instant and most sympathetic response from the in- 
telligence in control. One of the objects of efficiency 
work is to give an industrial plant a nervous system ; 
but, in the present general lack of it, pains and aches 
among the minor members may never be recognized by 
the head of the business until the annual balance is 
struck, and perhaps not then. 

The minor executives, however, the foremen, sub- 
foremen, and straw bosses, feel such troubles very 
keenly. On account of their burden of responsibility 
they feel them even more keenly than do the direct 
workers. Consequently, it is at this point in the or- 
ganization that the troubles, the symptoms of ineffi- 
ciency, come to the surface. 

Any concern that wants to know its own symptoms 
will learn a lot about them by getting from every one 
of its minor executives a frank statement of his trou- 
bles. Then, to diagnose, it has only to analyze these 
troubles into violations of the principles of efficiency, 
as I have done in the case cited in Article 12. Further, 
the remedy is to practice those principles which are 
found to be violated. 

14. One exception to the above is to be noted. Most 
foremen and their assistants have never seen good 
Planning and Despatching. Therefore they are not 
conscious of the lack of them, and they generally have 
to be questioned in some detail to bring out the facts. 
I usually ask a foreman, "How do you plan your 
work?" Even this often fails to bring out the de- 
sired information, and I then have to resort to a line 
of questioning somewhat like the following — 

What is that man over there going to do next? 

How do you know he will do that next? 

Why are you going to give him that job next? 



14 APPLYING EFFICIENCY PEINCIPLES 

How soon will he be ready for his next job? 

How do you know he will be ready then? 

Are the materials and tools ready for the job? If 
not, when will they be ready? 

How do you know they will be ready in time ? 

I have found two foremen who proved to be planning 
and despatching their departments very efiSciently in 
their heads, and carrying in their minds the whole 
layout of work in prospect; so I do not consider the 
absence of the standard apparatus of planning and 
despatching as sufficient evidence that it is not being 
done. 

15. When you go to consult a doctor, usually he lis- 
tens first to your own statement of your symptoms, 
then he orders off all clothes that interfere with what 
he intends to do next; and finally he goes over you 
with his stethoscope, his clinical thermometer, and per- 
haps with his X-ray machine. 

The investigation of the minor executives' state- 
ments of their troubles corresponds to hearing the 
patient 's statement of his symptoms. It is next neces- 
sary for the efficiency doctor to make his own inves- 
tigation with all the skill that he possesses. A full 
knowledge of all the principles of efficiency shows the 
investigator where and how to look for violations of 
them and for failure to apply them ; then, in order to 
prescribe the necessary remedies, he must know how 
to apply the principles. The succeeding chapters, 
therefore, take up the application of every principle 
in turn. 



Chapter III 
HIGHER COMMON SENSE 

16. 

AT any stage of betterment work as soon as a point 
of immediate attack has been selected its prob- 
lems become the subject for the application of the 
principle of Higher Common Sense. The first opera- 
tion necessary is that of the analysis of these problems 
by the principles of eflBciency. 

It may be necessary at any stage of betterment work 
(and it is practically always necessary at the begin- 
ning of one's experience in it) to examine formally the 
existing conditions by comparison with every one of 
the principles of efficiency: to ask (one's self, at 
least) — 

How does this accord with higher common sense? 

What are the ideals? 

Is the personnel suitable? 

What is the organization? 

Are the conditions and work adapted to each other? 

Are the methods correct? 

Has the personnel been instructed? 

Is there a fair deal? 

Is there discipline? 

15 



16 APPLYING EFFICIENCY PRINCIPLES 

Is the work planned and despatched? 

Are there proper records? 

Are there correct and adequate standards? 

Is efiBciency rewarded? 

The difficulty of answering any one of these ques- 
tions may necessitate the acquiring of further infor- 
mation. The best, quickest, and least expensive means 
is the one to use for the purpose. In industry that 
means is so commonly the time study that an example 
of one for this purpose is given in Table 12. (See 
Article 202.) 

Of course, as one becomes skilled, such analyses by 
the fundamental principles become more and more 
instantaneous and sub-conscious; just as during the 
process of learning to read, the first slow process of 
spelling out every word letter by letter gradually dis- 
appears into the rapid recognition of each word as a 
whole, in which there is no conscious thought of the 
letters. 

17. Nevertheless, analysis remains at all times fun- 
damental in the application of the principle of Com- 
mon Sense. A problem as a whole may appear com- 
plex beyond solution, but as it is separated into its 
elements, many of them are found to be familiar. The 
most usual case of this to the efficiency worker occurs 
in the time-motion study, in which an operation strange 
and new to him, and as a whole impossible for him to 
judge, is found to be composed of elementary move- 
ments whose efficiency he can gauge with approximate 
accuracy. 

As soon as analysis has revealed the elements, at- 
tention can be focussed upon those which present diffi- 
culties by reason of their unfamiliarity. In dealing 
with these, the principle of Organization offers great 



HIGHER COMMON" SENSE 17 

help through competent counsel. (See Articles 58 and 
59.) 

18. After analysis, and an adequate consideration 
of the elements revealed by it, comes synthesis. Analy- 
sis followed by synthesis often occurs in time-study 
work in which operations are analyzed into their ele- 
ments, the time for each element is determined, and 
then these elementary operations and times are syn- 
thesized into formulas for the standard time on the 
complex operations for a wide range of cases. Exam- 
ples of this are given in Tables 8 and 10, and in Ar- 
ticles 188, 189, and 191. 

Another frequent case of synthesis is to take the 
elementary operations revealed by a time-motion 
study, eliminate unnecessary or waste operations, sub- 
stitute efficient for inefficient elements, and, from the 
elements finally accepted, synthesize a correct method 
for the performance of the complex operation. This 
is illustrated in Table 6 and in Article 166. 

Cost finding is another example of analysis and 
synthesis; as the cost is first analyzed into its ele- 
ments, the values of these elements are determined, 
and then the elements are synthesized into the com- 
plete cost. Chapter XVI is devoted to the detailed 
explanation of this. 

Evidently there may be any number of other uses 
for analysis and synthesis, and proficiency in both is 
essential for the successful performance of betterment 
work. 

The result of any synthesis should itself be tested 
by all of the principles of efficiency, in a manner simi- 
lar to that stated in Article 16 for analysis. 

19. Knowledge, of course, is essential both to analy- 
sis and to synthesis. Common sense bids us not to try 



18 APPLYING EFFICIENCY PEINCIPLES 

to rediscover all previous knowledge, but to use the 
knowledge of the past as it is preserved for us in rec- 
ords. This recorded knowledge is the theory of the 
subject. It seems self-evident that we ought to value 
and use it; but one of the fundamental causes of our 
inefficiency is our scorn of theory. We tend, in fact, 
to a gross empiricism. We have only to keep on in 
that course to be absolutely dominated, in war and in 
peace, by the Germans, those four-eyed, high-browed, 
arch theorists of the world. 

The word ''higher" is added to the name of this 
principle in order to call attention to the need for 
knowledge of sound theory. If it were not for our ten- 
dency to undervalue such knowledge, this principle 
might as well be called ''Common Sense." 

20. The apparent reason for distrust of theory is a 
failure to realize its limitations. The only trouble with 
theory is that it is incomplete. Outside of pure math- 
ematics, the most that theory can do is to draw a 
circle around the answer, and say that it is some- 
where inside. To locate it exactly requires experience ; 
but even then time and money are saved if, instead of 
relying upon haphazard observations of the results of 
ordinary work, an artificial experience for the definite 
purpose of determining the answer is undertaken ac- 
cording to the laws of experimental research. Also 
time and money are saved by first limiting the field for 
research, as much as possible, by the application of 
theory. If the principle of Records has been applied 
to the work of the organization in the past, the only 
research necessary may be the scientific study of those 
records. 

Experimental and research work is best conducted 
separately, if possible, from regular production. The 



HIQHEB COMMON SENSE 19 

two lines of work interfere with each other if the effort 
is made to conduct them together. As to research 
looking to new products and processes, it is best con- 
fided to a separate research or experimental depart- 
ment. Eesearch on the conduct of existing processes 
is best confided to a separate staff whose whole duty it 
is to attain and maintain a high efficiency, and which 
is relieved from all responsibility for production. 

The regular direct (commonly called productive) or- 
ganization has all that it can do to get out the product 
by existing methods, without being called upon to de- 
vise improvements. It is like a man who is being 
chased by a bull. It is up to him to get over the 
ground. He may very highly value an automobile, 
but he is in no position to stop running long enough 
to start one. It is the duty of the efficiency staff to 
start the automobile of improvements, help the direct 
or line organization on board, and turn the steering 
wheel over to it. This does not mean that the staff, 
whose duty it is to offer advice and suggestions, 
should not welcome suggestions and advice from the 
line, whose duty it is to get out the product. Every- 
body connected with the organization should be en- 
couraged to come out with any good ideas that may 
occur to him. (This is taken up again in Article 83.) 

21. The mere problem of an adequate knowledge of 
theory is a formidable and, if it were put up to any 
one individual, quite insuperable matter. A working 
solution can be obtained, however, by taking compe- 
tent counsel through the application of the principle 
of Organization. 

The application of the above recommendations evi- 
dently requires specialization ; the value of which, un- 
der the name of ''division of labor," was one of the 



20 APPLYING EPFICIElSrCY PRINCIPLES 

first things to be recognized as a cause of industrial 
efficiency. However, the finer the specialization, the 
more numerous must be the personnel; hence, there 
are economic limits to its practical application. (Ar- 
ticle 166 is devoted to the further consideration of 
this subject.) It is necessary, therefore, in treating 
the subject of Organization, to consider the problem 
of attaining the efficient discharge of all functions with 
the minimum number of people. This is a matter in 
which the large concern evidently has an advantage 
over a small one, but there are other matters equally 
important in which the small concern has the advan- 
tage. 

22. In our effort to secure higher Common Sense, 
we must not forget that good plain common sense is 
just as important. 

This faculty consists largely, if not altogether, in 
habitually forming judgments on practical questions. 
A judgment is a conclusion formed by comparing items 
of knowledge with each other. There is a natural 
tendency for the mind to challenge every item of new 
knowledge by all previous knowledge, and this ten- 
dency must be encouraged in order to cultivate com- 
mon sense. Failure to do this is one of the commonest 
ways of allowing errors to be accepted by the mind and 
to pass over into practice. 

A young officer of a ship was assigned the duty of 
checking a coal dealer's bill by measuring the volume 
of the coal pile as it lay on a lighter alongside. His re- 
sults showed that the dealer had billed for consider- 
ably less than he had delivered. The captain at once 
exercised common sense by comparing this report with 
his experience of coal dealers, and judged the two to 
be incompatible. He therefore assigned an older officer 



HIGHER COMMON SEliTSE 21 

to check the work of the junior. The senior started 
out to measure the coal pile and found that the tape 
line was a foot short, whereby all dimensions reported 
by the junior were one foot too great. The junior 
had walked all around the coal pile, and had taken and 
averaged several measurements of its height, but he 
had failed to compare his result of six feet with the 
obvious facts that he was not six feet tall and yet could 
easily see over the coal pile at every point. In other 
words, he had failed to exercise common sense. 

Obviously, common sense requires not only contin- 
ual judgments, but also the fund of previous knowl- 
edge with which to make the comparisons; and this 
previous knowledge must come both from study and 
experience. 

23. Right here comes the difficulty, for every busi- 
ness is practicing two arts, that of making its product 
and that of managing its affairs. 

In a small plant, making the product is the big prob- 
lem. The difficulties of management are small, almost 
inappreciable, in comparison. As a result, a small 
plant operated by a management that is both techni- 
cally skilled and financially interested is often very 
efficient. 

Unfortunately, this produces a tendency to ignore 
and even to despise the problems of management. As 
the business develops, the problems of management 
grow in more than a direct ratio. By and by it begins 
to be realized that the business is no longer as efficient 
as it was, although in its technical processes it may be 
as good as ever, or better. Finally, it may be realized 
that it is on the other side of the problem, that of man- 
agement, that losses are occurring. 

Evidently, knowledge of theory, practical experi- 



22 APPLYING EFFICIENCY PEINCIPLBS 

ence, and the use of both by the exercise of Higher 
Common Sense are now as necessary on the manage- 
ment as on the technical side of the business. This 
ability in both lines, however, is not apt to be found 
in any one person. Either technique or management 
is so absorbing, that it is a rare individual who has 
the capacity to master both. This necessity for dual 
personality is one of the problems that must be solved 
by the application of the principle of Organization. 
And the separate persons must co-operate closely and 
harmoniously, which brings up one of the big prob- 
lems of Personnel. 

24. It is evident that management cannot succeed 
by dealing with events as they occur, but must fore- 
see and forestall the events. This brings Higher Com- 
mon Sense right to the front. 

Take materials, for example. In order that the 
right materials may be obtained, there must be fore- 
knowledge, derived from practical experience, of the 
requirements, not only of the working processes to 
which the materials will be subjected, but also of those 
processes that the finished article must meet in use. 
To determine how to meet these requirements, one 
must have scientific knowledge of the physical and 
chemical properties of the material in question, as 
well as of the processes by which it is produced. To 
determine whether the material as furnished actually 
possesses these properties, one must have scientific 
knowledge of the testing of materials. 

The problem looks even more difficult if we con- 
sider an actual case in which sheet steel was to be 
worked in draw presses. The requirements of such 
a process are complex and severe, and the ability of 
the metal to meet them may be ruined by an error 



HIGHER COMMON SENSE 23 

either in its chemical composition or in the heat treat- 
ment or mechanical processes of its manufacture. 
Finally, it is difficult to conceive of any adaptation of 
the recognized methods of testing which would deter- 
mine whether or not the material in thin sheets really 
possesses the required properties. 

Scientific Eesearch would undoubtedly establish a 
definite chemical composition and definite heat treat- 
ment and mechanical processes which could be de- 
pended upon to produce the required material; but 
this would take time and expense, during which losses 
would be occurring daily in the factory in trying to 
work unsuitable materials. 

Common sense suggested that the desired knowledge 
was already in existence ; that the users of the steel 
knew the processes through which it had to pass and 
the requirements of the finished articles, and that the 
makers of the steel knew its composition and the proc-. 
esses of its manufacture. The users and the makers 
were therefore brought together by inducing the 
former to furnish the latter, as a specification, sam- 
ples of their product, finished and in various stages of 
manufacture, together with a complete statement of 
the manufacturing process through which each article 
passed. Reliable makers were easily found who took 
upon themselves the whole burden of so controlling 
their own manufacture as to produce the required ma- 
terial. When the question arose, how to determine 
whether the materials furnished conformed to specifi- 
cations. Common Sense suggested that the draw 
presses themselves were the best testing machines for 
the purpose, and the steel makers established them as 
such by guaranteeing against loss by failure of their 
material in process of manufacture. 



24 APPLYING EFFICIENCY PKINCIPLES 

Obviously, the solution adopted was open to certain 
objections. It involved, in the first place, a departure 
from the previous policy of secrecy on the part of the 
users of the steel. Further, it involved their tying 
themselves to certain steel makers. For these reasons 
it is not offered as a desirable substitute in ordinary 
cases for the purchase of material in the open market 
on specifications, and its inspection and test by the 
users themselves; but it did furnish relief in a bad 
situation until more satisfactory permanent methods 
could be installed. 

It has been said that "Science is foreknowledge," 
and it is evident that we can foresee the future in 
proportion as we thoroughly know conditions and the 
laws of nature. As our knowledge of both is imperfect, 
we can anticipate the future only approximately and 
for a limited time, but enough can be done to be of 
great industrial value. The working out of this idea 
leads to the development of the principle of Planning 
and Despatching. 

25. Business tradition teaches that — 

Wages must be low in order to have low costs ; and 
that 

A low ratio of overhead, or indirect, expense, is an 
indication of high efficiency. 

The application of Higher Common Sense to these 
traditions shows them both to be fallacies. This has 
been discussed and emphasized so much by efficiency 
engineers that it would be out of place here to do more 
than refer the reader to the literature of the subject. 
Gantt has pointed out not only that these two tradi- 
tions are fallacies, but that their general acceptance 
is among the most serious obstacles to industrial effi- 
ciency. 



HIGHER COMMON" SENSE 25 

Among the most necessary applications of Higher 
Common Sense is the substitution of real knowledge 
for fads, fancies, and traditions. Harrington Emer- 
son summarizes the situation in the aphorism, ' ^ Know 
the facts." 

26. It is obvious that in many respects one cannot 
proceed directly to the application of Higher Common 
Sense. Just as analysis (Articles 1, 2, 3, and 5) shows 
Higher Common Sense to be the compound of all the 
other principles, so in practice we must synthesize it 
as the result of the application of all the other prin- 
ciples. 



Chapter IV 
IDEALS 

27. 

AN officer of the Pittsburgh and Lake Erie Eail- 
way, who was taking me over the line and point- 
ing out to me the ways in which that road had worked 
for high efficiency, said among other things: ''You no- 
tice that this road is located along the banks of the 
streams. This is a manufacturing region but the 
country is hilly, and flat land suitable for factory 
sites is to be found only along the banks of the streams. 
We foresaw that factories would want these sites, and 
located our road as you see. Then, when factories 
came in, we gave them the very best service. That 
brought more factories, and gave us a big freight busi- 
ness. Also our location on flat land gives us a road 
free from heavy grades, and enables us to haul big 
train loads." 

Afterward, in talking with an officer of another 
road, I cited the Pittsburgh and Lake Erie as an ex- 
ample of efficiency. ''Oh!" he exclaimed impatiently, 
"You can't talk about the Pittsburgh and Lake Erie. 
Any road could be efficient if it had their advantages. 
Their road is a procession of factories from one end 
to the other. And they haven^t a grade on it of more 
than 3^ per cent. ' ' 

26 



IDEALS 27 

*'My dear sir/' I replied, *'the Pittsburgh and 
Lake Erie certainly has those advantages, but not by 
chance. Its management foresaw the need of those 
things and got after them. Now it has them." 

In this matter, the Pittsburgh and Lake Erie man- 
agement set two ideals clearly before itself — 

The possession of a right-of-way along the banks of 
the streams, and 

Excellent service to its customers. 

It has pursued these ideals consistently for years, 
and it now profits by so doing. 

The efiScient manager adopts definite and correct 
ideals and gets after them resolutely and courageously. 
After he has stood the knocks and has conquered the 
difficulties, and begins to profit by the results, his less 
successful rivals complain that if they only had his 
luck they could have done equally well. 

In order to get anywhere, it is necessary for the 
manager to have a clear idea of his destination and to 
stick to the road in spite of the bumps. 

28. How about those lower down in the organiza- 
tion? In Article 8, I gave an instance in which the 
acceptance by a straw boss of the false Ideal of limita- 
tion of production proved a serious obstacle to effi- 
ciency. This ideal is widespread among workmen. In 
another case, a foreman 's Ideal of graft nearly brought 
on a strike. (See Article 388.) 

We well understand the necessity for team work; 
and it is evidently necessary in order to have it that 
the whole organization should be animated by the 
ideals of its chief. 

On this point, Lieutenant Commander D. W. Knox, 
U. S. Navy, treating the same subject with particular 
reference to the naval service, and emphasizing the 



28 APPLYIISTG EFFICIEN'CY PKINCIPLES 

absolute necessity for the subordinate officers to be of 
a single mind with their commander in chief, says : 

The body of junior commanders must be almost literally 
of one mind with their commander-in-chief and with each 
other, if frictionless and automatic team work is to be ob- 
tained. Their direction at every point should be unhesitat- 
ingly the same as would be given by the commander-in-chief 
himself were he present. Then, and only then, can the or- 
ganization fully accomplish its purpose — unity of action in 
accordance with an expressed plan. 

The need for this type of understanding, as well as for 
the resulting concerted action, should be apparent to any 
one giving mature thought to the subject of command. It 
is recognized as a necessity in the principal foreign military 
organizations, and they attempt to supply the deficiency 
through what has been termed "doctrine." 

** Doctrine" in this meaning is even broader than 
''Ideals" and requires further treatment under the 
principles of Personnel, Organization, and Discipline. 

In the following chapter are three incidents of the 
methods of an industrial manager who was notably 
successful in permeating his whole organization with 
his own spirit, and they are interesting in this con- 
nection also. (See Articles 46, 47, and 50.) 

Confining our attention for the present to Ideals, 
how is the manager to eradicate the wrong ideals of his 
subordinates and replace them by others which are 
correct, adequate and consistent with his own? 

29. ''Safety First." We are all familiar with this 
motto. It stares us in the face at every turn. Evi- 
dently it has produced a great effect. In itself and 
alone it seems to have accomplished much. 

He who displays the sign, "Safety first," offers no 
reward for heeding it. On the other hand he evidently 
expects no selfish benefit from the warning. He gains 



IDEALS 29 

nothing, he gives nothing. Whoever heeds the warn- 
ing does it for his own welfare, not that of the per- 
son who warned him. 

There is, however, a strong hint of Discipline, of the 
sharp discipline of Nature herself. Whoever reads 
* ' Safety first" has brought vividly to mind the thought 
of grievous wounds, of maiming, and of sudden death, 
if he fails to heed. Even the addition, ' ' It is better to 
be careful than crippled," which one sometimes sees, 
is so superfluous that it rarely appears. 

However, at a difficult grade crossing, where an un- 
seen locomotive may be upon one in less time than he 
can cross the track, the Instruction, ^'Stop — Look — 
Listen, ' ' in connection with * ' Safety first" is not amiss. 
In other words, if the Ideal is at all difficult of attain- 
ment, the principle of Instruction may also have to 
be applied before the Ideal can be realized. In Table 
14, Article 236, is given an elaborate standard prac- 
tice instruction to foremen for securing the safety of 
themselves and their men. Also there is absolutely a 
Fair Deal. ' ' We have done our part, ' ' the sign seems 
to say, "you are warned. We set no arbitrary penal- 
ties. The risk is your own. Do as you please." 

30. The following is a circular issued to propagate 
the Ideal of courtesy: 

The following expression to its agents, conductors, and 
other representatives indicates the attitude of the Lacka- 
wanna Railroad on a subject of vital interest to its patrons : 

The possession in marked degree of any faculty should 
always be an incentive to develop that faculty. This com- 
pany considers that its agents, conductors, and other repre- 
sentatives possess above the average the faculty of being 
courteous to the public. To those who cultivate and exercise 
this faculty the company extends its congratulations and 
thanks; to those who do not fully appreciate its importance, 
careful consideration of the following is suggested: 



30 APPLYING EFFICIENCY PEINCIPLES 

First: The principle that underlies courteous treatment 
of others is simply that of doing unto others as you would 
they should do to you. 

Second: In a highly complex and complicated business 
such as that of the railroad there are many things that you, 
with your training and daily experience, understand with 
perfect familiarity, but which the public do not understand ; 
therefore, do not assume that the public should comprehend 
them without asking questions, but, when inquiry is made 
of you, give the courtesy of a reply just as full and clear as 
you can make it, and without any suggestion of superiority 
born of a greater knowledge. 

Third : Words are only one means of expression, and man- 
ner is quite as important ; therefore, remember that a kindly 
and gracious manner is not only the sign and mark of a 
self-respecting man, but is to your words what oil is to ma- 
chinery in making them move effectively to their purpose. 

Fourth: True courtesy is no respecter of persons. It re- 
members that **a man's a man for a' that," and gives the 
civil word and the helping hand as readily to the ill-clad 
stranger as to the official of the Company. 

Fifth: Courtesy is not only something the public have a 
right to expect of you, but it pays. 

It pays in the friends it makes to you personally and as 
representatives of the Company. 

It pays in minimizing the friction of your life, as well as 
that between the company and its patrons. 

It pays in raising your standing with the Company. 

It pays in the personal satisfaction resulting from having 
done the right and kindly thing by your "neighbor." 

It is the wish of the management of this Company that all 
its representatives, whose work brings them into contact with 
the public, may appreciate and fully measure up to their 
duty and privilege in this respect. 

While the railroad would probably not claim any 
altruistic motive in this expression, at least it must 
be given credit for enlightened selfishness. The road 
does ask something for itself, but that something is of 
vague and intangible value, and the company's benefit 
from it is indirect and uncertain. On the other hand, 
the employee's gain from the practice of courtesy is 



IDEALS 31 

direct, immediate, and certain. There is, therefore, 
little need to offer any prospect of reward by the rail- 
road for the pursuit of the ideal, and it is only hinted 
at in the words, ''It pays in raising your standing with 
the company." 

For the same reasons, there is little need to back 
up by discipline the propagation of the ideal of cour- 
tesy ; but even in such a case the principle of Discipline 
cannot be entirely ignored, and there is some hint of 
discipline in the words above quoted and in the clos- 
ing paragraph, "It is the wish of the management of 
this company that all its representatives, whose work 
brings them into contact with the public, may appre- 
ciate and fully measure up to their duty in this re- 
spect." 

Courtesy is a virtue which, even if appreciated, may 
not be attained. Some simply do not know how to be 
courteous. Moreover, the task of the railroad conduc- 
tor, trainman, or ticket agent in trying always to be 
courteous to all sorts and conditions of men, women, 
and children, many of whom are anything but courte- 
ous to him, is not easy. Hence, about half of the 
expression is taken up by Instruction as to how the 
Ideal may be attained. 

Again, there is a Fair Deal. The desirability of 
courtesy is pointed out and how to attain it, and the 
most valuable rewards are sure and automatic. Even 
if the employee's courtesy should be so unnoticed as 
utterly to fail to "raise his standing with the com- 
pany, ' ' his probable reward will not thereby be appre- 
ciably diminished. 

31. The next example of propagation of an Ideal is 
quoted from an article by Forest Crissey in the Satur- 
day/ Evening Post: 



32 APPLYING EFFICIENCY PEINCIPLES 

"Going After the Extra Nickels" 

The possibilities of a big sales force thoroughly trained in 
salesmanship and kept in a glow of enthusiasm for its work, 
are wonderful. I did not realize the responsiveness of such 
an organization until I put it to the test with a letter headed : 
Get that extra nickel ! This was sent to every store employee 
in the chain and to those of the central staff who made the 
rounds of the stores. In substance this letter read : 

"The stores of this chain make twenty -five million sales 
a year. Just think of what it would mean to this organiza- 
tion if all the clerks and telephone operators would speed 
up their salesmanship to a notch that would get an aver- 
age of just one extra nickel on each sale ! Figure it out for 
yourselves. It would mean a million and a quarter dollars 
in additional business, secured without an additional cent 
of cost. And it would mean increased pay for our whole 
sales force. You know that your salaries are already higher 
than those paid by stores outside of the chain to employees 
in positions similar to yours, and that you have far more 
attractive working conditions. 

"Now if you will put your shoulders to the wheel for a 
long, steady, constant pull to get that extra nickel on each 
sale, we shall be able to do still more for you in your pay 
envelope. "Will you do it? Let us hear from you both by 
letter and through the sales report." 

The result of this letter was an immediate increase in sales 
that was sensational in its size. And it was not a mere pass- 
ing spurt, either. Our clerks held to their quickened pace 
with wonderful persistence, with the result that our profits 
in that year were greatly increased — just how much I am not 
at liberty to say ; and our employees who helped to bring this 
result about secured their fair share of the increase. But 
the whole point of this incident is that there is always extra 
speed in a sales force picked, trained, and treated with the 
care ours receives. The splendid results of the ' ' extra nickel ' ' 
campaign were possible only because our clerks were so thor- 
oughly instructed in the art of constructive salesmanship, 
and because we had their enthusiastic loyalty. 

32. There is one big difference between this case of 
propagation of an Ideal and the two preceding. In 
this last, the employer is asking his employees to do 



IDEALS 66 

sometliing distinctly for Ms benefit. The company's 
interest in the matter is immediate and entirely self- 
ish. Note then how L.iuch more prominent the re- 
ward is in this example than in the two preceding. It 
is plainly promised and in the most tangible form — 
increased pay. Also the promise was kept, ''Our em- 
ployees who helped to bring this result about secured 
their fair share of the increase." 

This shades oif from Efficiency Eeward into the Fair 
Deal, which is also made prominent in the statement, 
*'Your salaries are already higher than those paid by 
stores outside of the chain to employees in positions 
similar to yours, and you have far more attractive 
working conditions." 

After one has read the chapter on Discipline, Chap- 
ter XIII, and fully understands the meaning of it 
as an efficiency principle, he will see that it is empha- 
sized by the foregoing expressions, "Kept in a glow of 
enthusiasm for its work, " " The responsiveness of such 
an organization," ''If you will put your shoulder to 
the wheel for a long, steady, constant pull," and, "We 
had their enthusiastic loyalty." 

As for Instruction, it is evident that the notice it- 
self was not sufficient to contain it, and that there had 
been long, persistent, and skillful instruction of the 
whole salesforce before the results could be accom- 
plished or even suggested. This is also evident from 
a further statement of the methods of this concern in 
Article 59. 

33. The examples of Articles 29 to 32 show that any 
effort to propagate an ideal must, to be successful, be 
accompanied or preceded by the application of the Fair 
Deal, Discipline, Instruction, and Efficiency Eeward; 
that instruction must be in proportion to the difficulty 



34 APPLYING EFFICIENCY PRINCIPLES 

of attaining the ideal, and that the Fair Deal and Effi- 
ciency Reward must be in proportion to the propaga- 
tor's own selfish interest in the success of his prop- 
aganda. Even Jesus, while He devoted so much of 
His attention to Instruction, and by the example of 
His own life exalted the Pair Deal and determined the 
Discipline of His church, yet found it necessary to pro- 
nounce eternal punishment upon the disobedient and 
to promise eternal bliss to the faithful. And wherever 
belief in Heaven and Hell grows weak, Christian prop- 
aganda languishes. 

34. The walls of some factories are abundantly 
plastered with the following: 

Every man should work and feel that he is a part of the 
firm and not merely a hired man. He should look after the 
business as though he owned it; and feel that, if he in any 
way neglected his work, the business would suffer. 

Every employer who puts this up ought very seri- 
ously to ask himself : 

Has the worker who reads it ever been made, in 
the least, a part of the firm? 

Has he ever been encouraged to make suggestions? 

Is he in reality anything more than a hired man? 

Has he, in any tangible way that directly appeals 
to him aside from the mere holding of his job, been 
given any reason to care whether his neglect causes 
the business to suffer? 

If all these questions can be answered satisfactorily 
the posting of such a notice will probably be unneces- 
sary; but, if there has been absence of the Fair Deal 
and of Instruction, if there is barely so much Disci- 
pline as there must be to do business at all, and if there 
is no adequate Efficiency Eeward, such a notice will 
arouse among the workers no response but derision. 



Chapter V 
PERSONNEL 

35. 

A FACTORY foreman explained to me his method 
of securing and keeping proper help. If possi- 
ble, he hired only unskilled labor ; that is, he took on 
only laborers and boys. A newly hired, unskilled 
worker was shifted about all over the department, 
wherever there might be need of his labor. When- 
ever there was an opportunity, this foreman would 
place some of his unskilled workers as learners with 
men who were doing skilled work. He kept some kind 
of a record, perhaps only mental, of the proficiency 
shown by these learners at the various operations of 
the department. If one of them showed more ability 
along one line than along others, his instruction was 
specialized as much as possible along the line of his 
fitness. When a vacancy occurred among the helpers, 
or among other workers having a small degree of skill, 
the boy or laborer who had shown the most skill in that 
work was moved up into it, and a new unskilled worker 
wa^ taken on. Similarly, vacancies among the skilled 
men were filled from among the helpers. 

By this means the foreman had built up a depart- 
ment in which he thoroughly knew all of his workers, 

35 



36 APPLYING EFFICIENCY PRINCIPLES 

except those unimportant ones who could be replaced 
off the street on short notice at any time. His men 
knew that, in so far as it was in the foreman's power, 
they could depend upon permanence of employment 
and promotion up to the limits of their own skill and 
the opportunities of the department; in other words, 
they could depend upon the Fair Deal. Consequently, 
they were contented and stayed on. 

Also, the foreman took all his risks in the positions 
of least importance. When it came time to fill any po- 
sition higher up, the foreman had a candidate for it 
whom he had tried out, and whose fitness for the posi- 
tion he knew. 

36. The method is both simple and effective, and it 
is a wonder that it is not more practiced. One of its 
evident virtues is that it conduces to permanence of 
Personnel; and this permanence is necessary (among 
other reasons) in order that the organization may be 
so permeated with the spirit of its chief as to attain 
the degree of team work essential for success, as previ- 
ously mentioned in the chapter on Ideals in connection 
with military "doctrine" (Article 28). 

On this point. Commander Schofield, U. S. N., has 
said: "In a military service, where many intellects 
must co-operate toward a single aim, and where the 
stress of events forbids the actual interchange of 
ideas, . . . there must be a governing idea to which 
every situation may be referred and from which there 
may be derived a sound course of action. It is only 
thus that the full driving power of an organization can 
make itself felt." 

Again, in discussing the situation confronting the 
commander of a fleet on the night preceding a prob- 
able battle, the same officer says : " No verbose instruc- 



PERSONNEL 37 

tions that he may issue now can have the remotest 
chance of converting an organization of form into an 
organization of intellect and spirit. Such a change is 
a matter of long and patient educational effort that 
eventually centers around a doctrine of military con- 
duct to which every act either of preparation or of 
execution is automatically referred. "When such a 
stage of development is achieved, a spirit of confidence 
becomes diffused throughout the service that invests 
it with a moral power of the greatest value." 

How many concerns are intelligently striving for 
permanence of personnel? 

How many concerns make a practice of hiring new 
people only at the bottom, and of promoting one of 
their own men, if possible, instead of bringing in an 
outsider? 

How many concerns make any effort to have their 
employees taught the duties of their own and of higher 
positions, even in time in which they could not other- 
wise be profitably employed? 

How many concerns provide a regular flow of pro- 
motion for their employees? 

How many concerns are qualified, by definite knowl- 
edge of the fitness of their employees, to make promo- 
tions strictly on merit? 

How many of them would do it even if they had the 
knowledge ? 

37. Many foremen will hire off the street a man who 
claims to be a machine operator, rather than to take 
the trouble to teach one of their own helpers. Even 
a managing director of a company, in reference to 
the officials of the company, said to me, ' ' We have al- 
ways gone on the principle of hiring a man from the 
outside rather than of promoting one of our own men, 



38 APPLYING EFFICIENCY PRINCIPLES 

because we felt that if we made the promotion, we had 
to train two men, while the other way we had to train 
only one." ■ 

So far was he wrong that by the application of In- 
struction before the vacancy occurs, and of the Fair 
Deal in filling it when it does occur, the man for the 
position is already trained and steps right into it. 
All down the line there is a similar upward move of 
people already trained, and a new worker comes in 
at the bottom, all without disturbance or delay. 

It is true that one seldom finds a shop boy or a 
laborer who is capable of developing to fill important 
positions, though there are some such and their ex- 
ceptional talent should have its opportunity; but the 
rareness of it obliges the employer to have several 
ladders of promotion, each with its own bottom rung 
and successive upward steps. 

On these principles, military services, while afford- 
ing some promotions from the ranks, in the main admit 
their commissioned personnel in the lowest ranks of 
cadet corps. Similarly, large industries have been 
obliged to organize student apprentice corps, at the 
bottom of which graduates of technical colleges are 
admitted, and from which they normally rise to official 
positions. 

A military service, besides providing promotions 
from the ranks to commissions for those rare indi- 
viduals who are fit for them, provides for the man of 
ordinary ability a career in promotion to non-commis- 
sioned and warrant rank. Similarly industry, recog- 
nizing the rarity of the workman who can become an 
officer of the company, ought to offer to the competent 
industrial private reasonable prospect of rising to 
minor executive positions. 



PEKSONNEL 39 

In spite of the best efforts there will be an occa- 
sional time when there is no work available for some 
one. By applying the principles of Planning, this 
ought to be foreseen and Instruction ought to be pro- 
vided for that person during his otherwise idle time. 
This does not mean that some one must stop work to 
teach him, though perhaps that can be planned for 
out of the otherwise idle time of the teacher. In the 
main, it means only giving him a chance at the work 
he is to learn. Also, there will be times of temporary 
absences which can be filled by temporary promotions 
all the way down. In these and other ways Instruction 
can be provided at a minimum of expense. 

This leads to the subject of understudies, which is 
discussed at length in Article 252. 

38. We may analyze the problem of Personnel into 
two parts : 

First, to get the right person into every position ; 
and 

Second, to keep him in it as long as his services 
are available, or until efficiency can be increased by 
his promotion. 

39. The problem of getting the right person into 
every position can be attacked in two ways : 

First, the requirements of the position and the 
qualifications of the person can be studied, and the 
most suitable person available can be selected; and 

Second, the system of recruiting and promotion 
stated in Article 35 can be used so as to minimize 
the errors of selection. 

40. In tackling the problem along the second line, 
we must be prepared for a certain amount of failure 
of any scheme of instruction and promotion of our own 
men to fill all the vacancies that occur. Progress and 



40 APPLYING EFFICIENCY PKINCIPLES 

change in industry occasionally produce needs for 
which our own methods have not trained any one. 
Casualties and opportunities elsewhere may deprive us 
of our available material just when the need arises for 
it. Therefore, we shall occasionally be obliged to fill 
positions anywhere along the line from the outside, in- 
stead of following the preferred scheme of always fill- 
ing in at the bottom. 

It is probably just as well that this is so. Too com- 
plete application of the preferred method produces the 
effects of excessive inbreeding, so that it is desirable 
to bring in occasional new blood and new ideas from 
outside. This need not cause any anxiety, because it 
will probably never be possible to work the preferred 
scheme to excess. 

41. A candidate who would be considered at all for 
a position as important as that of foreman or head of 
an office department, or for any higher position, must 
necessarily have some verifiable record which fur- 
nishes a sufficient indication of his fitness. I have 
myself applied this method to such positions with un- 
varied success. If one advertises his needs at all 
broadly, there are always enough applicants for such a 
position to give a good field from which to choose. 
Personally, I have never known such a field to fail to 
offer at least one competent person. 

42. It is necessary in filling a vacancy by this method 
to give more than usual attention to three points : 

Moral character, 

Capacity for work, and 

Health. 
Employers are apt to be a little shy about inquiring 
about moral character. They are properly reluctant 
to ask any questions about one's religion, and they 



PERSONNEL 41 

seem to consider moral character in the same category. 
Judaism and Christianity have wedded the two, but 
still they are separate things; and inquiries into a 
man's record for honesty do not involve any investi- 
gation of his theology. 

The result has been to neglect investigation of char- 
acter somewhat ; while, obviously, the lack of character 
puts the minus sign before all other good qualities that 
one may possess, 

43. The difficulty in the application of this method 
is that there are many positions of considerable im- 
portance for which candidates are apt not to have any 
records that are capable of verification. This diffi- 
culty ought not to continue to exist. I quote from Sid- 
ney Graves Koon: 

A large machine-tool company in Connecticut keeps careful 
man records, available from day to day and extending over 
months and years. These enable the management to promote 
the best men and to weed out incompetents on a basis so sure 
that error is practicably negligible. They also form a basis 
from which a man's record can be certified to a subsequent 
employer, without depending upon the uncertain and perhaps 
prejudiced memory of a foreman. The man's standing and 
general capabilities, along the particular lines for which he 
was used, are known at all times and in any detail desired. 
Not only is the individual record thus given, but also the gen- 
eral standing of any department or sub-department. The 
standing of the man as applied to a particular character or 
class of work is known and many other features of his em- 
ployment and use, all of which are of decided interest and 
advantage to a progressive management. 

Associations of employers ought to call the atten- 
tion of their members to the great value to them all of 
the general application of the principles of Records 
and Standards, as Koon has above explained. If 
there were general application of these principles, a 



42 APPLYING EFFICIENCY PKINCIPLES 

reference by an applicant to a previous employer would 
bring out information that would be both adequate 
and reliable. An applicant without reference would 
then be regarded as previously unemployed, or as of 
previous bad record, and in either case admissible only 
on probation and to the ranks of unskilled workers. 
Such methods as are here advocated are already com- 
ing into use by the combined action of employers in 
some localities, but generally without adequate appli- 
cation of the principle of Standards. Obviously, a 
man's record of achievement may work positive in- 
justice, unless by the application of a fair Standard 
the efficiency of the achievement can be quantitatively 
estimated and recorded. 

44. The selection of a competent person for any 
position is a highly skilled operation and, by our pres- 
ent methods, one usually entrusted to persons who have 
no fitness for it. Commonly, every foreman hires his 
own men directly. A foreman ought to be skilled in 
the art practiced in his department, he ought to be ca- 
pable of instructing his workers in it, and he ought to 
have minor executive ability. These requirements are 
enough to occupy him fully ; and when, in addition, he 
is expected to be an employment expert, it is no won- 
der that he falls short. 

Eecognizing that employment work is a specialty, 
logically a specialist ought to be used for it. There 
are enough routine requirements of such work to place 
it beyond the powers of one who has anything else to 
do. These requirements embrace the search of the 
labor market, especially the local one, for available ma- 
terial ; the keeping of adequate and reliable records of 
such material;, the investigation of previous records 
of applicants; communication with applicants when 



PERSONNEL 43 

their services are wanted, and the keeping of records 
of employees after their services are engaged. Added 
to these duties are others of a highly skilled nature. 
These include : listing the human requirements of vari- 
ous positions; interviewing applicants and judging 
their fitness for particular employments; selection of 
candidates who, while technically fit, are also suited 
to their human environment, especially to the person- 
alities of their immediate superiors; the selection of 
at least one understudy to every skilled worker; and 
the adjustment of personal difficulties among the work- 
ing force, especially those between workers and their 
immediate superiors. 

Eeferring again to the requirements of 

Technical skill, 

Moral character, 

Capacity for work, and 

Health ; 
such skill as should be possessed by a specialist in 
employment makes him a much better judge of the 
last three than any one can be whose attention has been 
engrossed with the matter of technical skill. Your 
foreman could never form a competent judgment on 
your general health. Your family physician or a life 
insurance examiner will do it reliably in an hour or 
less. It is easily possible for the employment super- 
visor to acquire enough of the physician 's skill in this 
matter to make in even less time as good an estimate 
of health as is required for most employments. For 
those requirements that are beyond him, he should 
have the competent counsel of a physician. No one 
would employ as blacksmith's helper a man of slight 
figure and small muscular development, no matter how 
good his general health might be ; but questions of one's 



44 APPLYING EFFICIENCY PBINCIPLES 

relative fitness for sedentary or active labor, for run- 
ning an elevator or helping a machine operator, are 
not so obvious to the unskilled judgment, but may be 
perfectly plain to one who has specialized in such mat- 
ters. Moral errors also leave traces which are readily 
discernible to the skilled observer. 

Employment is too big a matter to be handled ade- 
quately in any treatment of the general subject of 
efficiency, and those further interested must refer to 
the literature on that specialty. My present point is 
that it is a highly skilled specialty, and therefore ought 
to be taken out of the hands of people who know noth- 
ing about it and be confided to some person competent 
to handle it. Obviously, in the case of the small con- 
cern, we are again up against the difficulty of specializ- 
ing, but the needs of it are so great that it would be 
well for such employers to combine locally and main- 
tain a joint employment bureau under competent man- 
agement. 

45. On the other hand, the employment supervisor 
can not be expected to be a competent judge of techni- 
cal requirements. His function in that respect should 
be limited to obtaining and summarizing such details 
of the applicant's record, if any, as bear on the subject. 
He should then pass the applicant and his summarized 
record on to some competent person, probably the fore- 
man of the department in which the work is done, for 
examination and report. 

Also questions of race, religion, and temperament 
require the co-operation of the line organization with 
the employment supervisor to secure the best results. 
Nothing but trouble is invited by placing a white 
American under a straw boss of any other race than 
the Caucasian. A rationalist in religion and a zealous 



PERSONNEL 45 

proselyting adherent of dogma are not apt to get along 
together, no matter which is boss and which is worker. 
Similarly, people who are of quick, active, nervous 
temperament and those who are slow, painstaking, and 
phlegmatic are usually a mutual irritation. For these 
reasons any foreman or other executive should have 
veto power over the selections of the employment 
supervisor; that is, while the latter should search the 
available material and, with the assistance of the tech- 
nical expert, should select the person to be recom- 
mended for employment, the foreman or other boss 
should always have the right, after trial, to reject any 
applicant, and to send him back to the employment 
supervisor for the mere reason that he is not person- 
ally agreeable to the boss. 

46. Of course, the boss himself may abuse this privi- 
lege. If he does so grossly, it will at once become ap- 
parent, and the employment supervisor ought to settle 
the matter immediately by an appeal to the boss 's line 
superiors. Less obvious error of the boss ought to be 
detected by the application of the principles of Stand- 
ards and of Eecords, and be corrected by the applica- 
tion of Common Sense. 

The following extract from an article by Edward 
Mott Woolley, published in the Saturday Evening Post, 
will make my meaning clear : 

As the business grew, the individual contact of the chief 
executive necessarily was confined more and more to the 
higher executives ; yet even today, ' ' the spirit of the house, ' ' 
as he calls it, is the identical spirit of its head. It filters 
down through the organization. 

Here is an instance of how it filters : 

Within the last year the president of the company sent for 
the executive head of one division. 

**I find from my. statistics," he said, "that your division 



46 APPLYING EFFICIENCY PRINCIPLES 

shows the highest percentage of quits and discharges. You 
are away above the normal and we must find out where the 
trouble lies." 

Then they had a special research made. Every man who 
had left the employ of the house during the year, as far as 
that division was concerned, was communicated with, either 
in person or by letter. To each man these questions were 
put : 

If you left voluntarily, what were the inner motives that 
, prompted your act? And if your departure was not volun- 
tary, in what measure do you consider the house to blame 
for the differences that led to your going ? 

Nearly all the men returned some sort of an answer. One 
minor executive, who had resigned to go to another house, 
explained the thing in substance like this: 

''I had been in the accounting department thi-ee years 
without making much progress. I was tired of the job and 
didn't see any future ahead. It looked to me as though the 
house was so big that it had about reached its limit, espe- 
cially in that line of work; so I looked around and got a job 
with a good lively house, where I had more chance to swing 
myself, to put in new ideas and draw more money. ' ' 

To the president this was something of an eye opener. 

"We haven't been handling this man right," he said, "it 
we have allowed him even to imagine that ideas weren't 
worth as much to us as to any other house, big or little. ' ' 

This led to a scrutiny of the accounting department. 

"Is it true," asked the president, "that we have developed 
this department to its limit? We have been priding ourselves 
that we had a good accounting department; but perhaps it 
has been mere self flattery." 

He ordered a research made into the methods of accounting 
departments in other large concerns, and this showed him 
that his own had been lacking in modern ideas. The execu- 
tive was hired again and given authority to dig up all the 
ideas he could and to try them out. This resulted in a new 
auditing department of which he was made the head. 

It resulted, too, in a policy of keeping track systematically 
of all the men who leave the company 's employ, as far as it can 
be done without prohibitive effort. Regular reports on these 
men are made to the president, who goes over the records 
and finds in them a lot of things to think about. 

One man who had left the house to establish a business of 
his own was found to be prospering in an unusual way. 



PEESONNEL 47 

''Why did we let him go?" asked the president. "We 
should be better analysts of men than that. With our great 
opportunities here in this business we can offer men of that 
kind inducements which will keep them with us. We must 
not let men of this caliber get away so easily." 

Then he sent a telegram to his former executive, who had 
succeeded as a merchant by himself, and invited him to take 
a train that night and come to the old stand for a confer- 
ence. Shortly after the big house absorbed the offshoot, and 
the owner of the latter became once more a member of the 
great organization. He is now a vice-president. 

It is the aim of the house to get back sooner or later every 
exceptionally good executive who has left. 

Another discharged employee, on being asked why he con- 
sidered the house to blame for his downfall, named a certain 
superior and said very uncomplimentary things about him. 
No special weight was attached to this until several other 
discharged employees referred in an uncomplimentary way to 
this same superior. They called him names, such as toad, rat, 
lobster and perhaps skunk. I am not sure about that. At 
any rate, they made quite a menagerie of him. 

Out of this grew a close analysis of this man, and he was 
quietly superseded by somebody else who M^as in better accord 
with that shrewd spirit which says that men must be handled 
psychologically, so as to bring out all of their good points 
and strongest efforts. 

47. According to Woolley's account, the house in 
question applies these principles not merely to cure 
such troubles after they have occurred, but to prevent 
them. He gives the following example later in his 
article. 

Some twelve years ago a youth applied at this house for a 
job. It is told of him that while waiting in the employment 
room he killed time by throwing paper wads at the other 
applicants, and got into an altercation that in any other 
employment department would have finished him on the spot. 
Oddly enough in this house the very fact that he threw paper 
wads attracted attention to him — not exactly favorable atten- 
tion, but a certain degree of curiosity. This curiosity was 
nothing more nor less than the spirit of the president filtered 
down to the manager of the employment department. 



48 APPLYING EFFICIENCY PEINCIPLES 

The boy was nothing extraordinary; on the contrary, he 
measured up pretty scant when it came to the problem of 
twenty-six plus eighteen plus one — or something of that sort. 
He got the answer forty-seven — or something relatively as 
far from the correct one. He wrote uphill and went down- 
hill on grammatical construction. But for some singular 
reason, he got by and was put on the eligible list; and a few 
weeks later he was notified to report for work. 

They put him in a stock room at six dollars a week. On 
the second day, the president walking through, got a first 
glimpse of him. He had a feather duster run down his back 
inside his shirt, and the feathers were waving over his yellow 
hair. He was a Comanche Indian, and he was executing a 
death dance. 

You will remember that the president is an analyst of men ; 
also of boys. So, instead of rebuking this boy, he went along 
and asked himself: 

What impulse moved him to undertake that violent exer- 
tion when he might have sat down and taken some leisure ? 

The president, following his system, resolved to find out. 
Next day, the boy was taken out of that particular stock 
room and put into another where the work was heavier and 
the help short. Nevertheless, he exhibited a surplus of energy 
and carried the additional burden without any complaint or 
let-down. Between jobs he practiced standing on his head. 

Then the youth was moved up again and some responsi- 
bility was added to his physical duties. Every time he broke 
out into an Indian dance or similar exuberance they gave 
him something to absorb his enthusiasm. At the behest of 
the president he was watched shrewdly, and periodical reports 
were made on his progress. 

He went up rapidly, and in the course of a few years be- 
came sales manager, which position he now occupies. It was 
his irrepressible enthusiasm that did it. The president and 
the organization simply harnessed it. 

This is an exceptional instance only in degree. The same 
thing is being done in that house right along. 



The discovery of the boy's overflowing enthusiasm 
and energy ought not to have depended upon a chance 
visit of the president of the company. 

A manager who depended upon such chance knowl- 



PEESONNEL 49 

edge once promoted a man because he turned out his 
light when the manager happened personally to call 
him away from his work. There was an immediate 
epidemic of turning out lights, followed by the com- 
plaint from the rest of the force that they also had 
turned out their lights and had not been promoted, to 
which the sequel was a general grouch. 

Instead, every worker's efficiency ought to be known 
daily by current records compared with fair standards ; 
and the possession of valuable qualities, or the con- 
trary, not made apparent by an arithmetical per- 
centage of efficiency, ought to be made known regu- 
larly to the employment supervisor by systematic 
reports from executives on their experience of 
their subordinates. One of the most useful func- 
tions of the employment supervisor is to study all 
these records in order to determine the qualifica- 
tions of every individual and, as soon as possible, 
to locate him in the employment for which he is best 
suited. These records are also very valuable aids to 
Discipline. (See Article 275.) 

48. It is a wonder that the boy in the story just 
told was not fired by the store-keeper to whose stock 
room he was first assigned. If he had been, a valuable 
man would have been lost to the house, and not by any 
fault of the store-keeper, but from lack of adequate at- 
tention by a competent person. To avoid such losses, 
discharged employees ought to be referred to the em- 
ployment supervisor, and the latter ought, if he con- 
siders the person so discharged to be capable of valu- 
able service, to transfer him to some other situation. 
If there is no chance for that, he can keep him on the 
eligible list for suitable employment when the vacancy 
occurs. 



50 ' APPLYING EPPICIEN-CY PRINCIPLES 

Magnus W. Alexander has calculated that it costs 
from $8.50 to $73.50 to change a single employee. It 
is therefore evident that one of the most valuable fea- 
tures of the employment supervisor's work is to se- 
cure permanence of personnel. To this end he may at 
times be able to induce executives to rescind discharges 
made in error and to allow the discharged employee to 
return to his previous work. (See also Article 277.) 

49. Since personnel is one of the primary principles 
of efficiency, it is evident that its application is one 
of the quickest ways to get results. On the one hand, 
this emphasizes the importance of employment work, 
such as has been discussed above; and on the other 
hand, it brings out the possibility of securing results 
promptly by filling the important positions with the 
right people. One of the main resources of persons in 
financial control is to hire a superintendent or mana- 
ger ; put it up to him to make good ; judge him by re- 
sults, in entire ignorance of conditions; and replace 
him by some one else if those results are not promptly 
forthcoming. This method has the disadvantage of 
resorting to a capital surgical operation for the cure 
of what on scientific diagnosis would perhaps be found 
to be minor ailments. 

In other words, if an organization is inefficient, it is 
usually well to reserve drastic changes in the person- 
nel of important positions until there has been a gen- 
eral application of the Principles of Efficiency in other 
directions. If this is done, it may be found that the 
apparently offending officers were really doing re- 
markably well under adverse conditions and that the 
improvement of those conditions, not the removal of 
the officer, is the thing needed to secure an increased 
efficiency. 



PERSONNEL 51 

50. Once the position has been filled by the right per- 
son, there remains the problem of keeping him. In 
the first place, the work must be made as agreeable as 
is commercially profitable by the adaptation of the 
work and the conditions to each other. In one large 
factory which I investigated, I found that there was 
difficulty in getting and keeping good female help. On 
seeking the reasons for this, it was found that the 
plant was remote from the residence districts of the 
class of women that it desired to attract, and that to 
get to and from the factory they had to ride long dis- 
tances through rough neighborhoods at hours when the 
cars were crowded with the lowest class of male work- 
ers, including negroes. This was a condition to which 
the women who were wanted would not submit. The 
use of jitney busses every night and morning might 
have solved this difficulty. Similarly, a draughtsman 
who values his sight as he ought will not stay nor can 
he work efficiently in ill-lighted drawing rooms. 

Placing the worker in the position for which he is 
suited is itself an important Adaptation of Conditions 
for this purpose. Woolley's article again furnishes a 
good illustration: 

The early researches of the president of this house showed 
him that it is not merely financial incentive to which men 
respond, but that genuine interest in their work is quite as 
much of a puller. Therefore, he studied men's characteris- 
tics, so that he might place them in the .lines of work for 
which they were mentally suited. 

When he established a statistical bureau he tried an experi- 
ment. After his statistical manager had been in that posi- 
tion six months, another job in the house was offered him at 
an advance of five dollars a week. He had been getting thir- 
ty-five. He took the new job in a hurry. 

Then another statistical man was picked out ; and in a few 
months he too was offered an advance in another line of 



52 APPLYING EFPICIEFCY PRINCIPLES 

work. He took it without hesitation. This was repeated 
several times with the same result. Then the president went 
outside of the house and found a man who was pre-eminently 
adapted for the work. He was hired at thirty-five dollars 
a week. Three months later he was tempted by the president 
with an entirely different sort of job at forty dollars a week ; 
but that afternoon he went to the president's office. 

"I've been thinking about this matter," he said, **and I 
believe I'll stay where I am, if it is all the same to you. I 
like the work I'm doing now. I'm built for it and I can 
fairly eat it up. I don't think I should like that outside job. " 

This and other experiments led the president to conclude 
that much might be accomplished by getting men to take a 
more genuine interest in their work, even though it was not 
possible always to duplicate this episode of the statistician. 

Besides fitting the man to his place, if he is to be 
kept hope must be held out to him in the shape of a 
regular system of promotion, and in every other way 
the Fair Deal and Efficiency Eeward must be applied 
by methods suited to the conditions. 



Chapter VI 
OEGANIZATION 

51. 

THE backbone of Organization is the Cbain of 
Command, which Colonel Foster explains as fol- 
lows : ' ' It is obvious that the commander of a military 
force cannot deal personally and directly with all those 
under his command, but only with a limited number of 
subordinate commanders. Each of the latter in turn 
conveys his will to his own subordinates, and this 
gradually broadening system, called the Chain of Com- 
mand, is carried on till every individual of the force re- 
ceives his orders. These orders are founded on the 
original orders of the Commander in Chief, with modi- 
fications and details added by each lower in authority 
in the chain so as to suit the special circumstances of 
his own command." 

It is equally obvious that the head of any except a 
very small organization cannot deal personally and 
directly with all those under his command ; and conse- 
quently that he also must have a Chain of Command 
through which to make his will effective. 

52. Analyzing Foster's statement, we find the ele- 
ments of organization and orders as further tabulated 
on the following page : 

53 



54 applying efficiency principles 

The Organization 

A Commander-in-Chief, 

A limited number of commanders immediately sub- 
ordinate to the chief, who alone deal directly with him, 

Other commanders subordinate to these, and others 
again subordinate to them in a definite gradation of 
authority. 

And finally, the individuals, or "privates" of the 
force. 

The Orders 

The original order of the chief. 

And modifications and details by each lower in the 
chain, so as to suit the special circumstances of his 
own command. 

Let us consider these elements. 

53. A self-made man had built up a successful manu- 
facturing business. His own practical experience be- 
ing limited to selling, he depended largely upon his de- 
partment heads in other matters. He paid good sala- 
ries, and collected able men about him as his "limited 
number of subordinate commanders." To these men 
he strongly applied the principles of Standards, of 
Eecords, of Discipline, and of Efficiency Eeward. By 
means of Standards, he knew what they ought to ac- 
complish ; by means of Records, he knew what they did 
accomplish; by Discipline and Efficiency Reward, he 
both drove and stimulated them to achievement. In 
the life of the founder of the business these methods 
were very successful. He died, and his son succeeded 
to the management. The young man had been brought 
up as a rich man's son, and would not under any cir- 



OKGANIZATION" 55 

cumstances give more than a very small portion of his 
time to the business. Only men who were not only 
strong and able, but also good fighters, had been able 
to survive as the immediate subordinates of the father. 
Under his strong rule they worked harmoniously to- 
gether; but when the son's inattention loosened the 
bonds of Discipline, they fell to fighting among them- 
selves to the damage of the business. 

Evidently this was a case of fundamental inefiiciency 
due to the lack of an adequate first link in the Chain 
of Command, the Commander-in-Chief himself. 

Of course, this lack cannot exist in the first genera- 
tion of control ; but the notorious fact that an Ameri- 
can business seldom survives three generations of 
management by the same family, indicates that it is 
very common where managements have been inherited. 

In any case, it is absolutely incompatible with effi- 
ciency; and any family that has inherited a business 
would be wise to ask itself, without any attempt at 
evasion, whether it has also bred a monarch capable of 
ruling its kingdom. If it has not, it had better with- 
out delay convert itself into a constitutional monarchy, 
choose a capable prime minister in the shape of a gen- 
eral manager fit to run the business, allow him to 
govern, and be satisfied itself merely to reign. 

There is a majestic example of the success of this 
policy on the scale of world-wide empire ; but there is 
so much tendency for the Pepins to make themselves 
kings, that the incompetents would probably do well to 
sell out and put what is left of the estate into govern- 
ment bonds. 

The function of the Commander-in-Chief, or General 
Manager, evidently is to deal with his immediate sub- 
ordinate commanders. Also, that is about his limit. 



56 APPLYING EFFICIENCY PEINCIPLES 

"We are greatly impressed by the stories of Haroun- 
al-RascMd prowling around Bagdad in disguise to see 
for himself what went on ; and his policy was all to the 
good provided it did not take too much of his time; 
but we cannot help wondering whether some of his ad- 
ventures did not interfere seriously with his own job 
as Caliph. 

If the Big Chief can manage to look in personally 
often enough, so that no one in the whole place will 
ever feel sure that the Old Man will not be standing at 
his elbow the next minute, he has done all that can be 
expected of him in this line; and even that may take 
him away from his own work too much. Records, 
Standards, Discipline, and Efficiency Reward, as stated 
at the beginning of this article, provide him a way out 
which is much more certain and which does not make 
such demands on his time. 

The president of the company sits at his desk in his 
private office. On another floor and directly over his 
head, a mechanic is filing at the bench. The workman's 
attention is wholly concentrated on one particular spot 
of metal, but his consciousness is no more closely fo- 
cussed on that spot than is that of the president on 
the particular sentence which he happens at that mo- 
ment to be reading in a report. The field of the me- 
chanic's attention is ample for the demands upon it, 
but how about that of the president? Seeing that the 
only field upon which he can at that instant exert his 
intellect, is the little spot which is momentarily illu- 
minated by the pocket flash-light of consciousness, how 
is the necessary information about the business to be 
focussed in that little spot? 

A client said to me, ''We have a mass of records, but 
they fail to give a bird's-eye view of the business." 



ORGANIZATION 57 

Here is a problem which must be discussed under the 
principle of Records (Article 132), that is, how to de- 
sign records which will bring to every one in the or- 
ganization just the information that he needs, and so 
concentrated that he can seize upon it and act on it 
in the time available for the purpose. 

Supposing this problem to have been solved to a 
working approximation at least and that comparison 
with a fair Standard shows the efficiency of every 
event, the chief then has the knowledge which enables 
him to apply the principles of Discipline and Efficiency 
Eeward with substantial accuracy and justice to his 
own immediate subordinates, and therefore to transmit 
his will effectively to the next link in the Chain of 
Command. 

54. We have to turn now from the Commander-in- 
Chief to the Order. Nature has had an experience of 
untold ages in Organization, and experiments which 
have survived the merciless struggle for life are mar- 
vellously efficient. 

However, in taking lessons from Nature we need to 
remember the artists' maxim, ''That which imitates 
Nature is hideous, that which is inspired by Nature is 
beautiful. ' ' In engineering, we might paraphrase this 
to, ' ' That which imitates Nature is clumsy, that which 
is inspired by Nature is efficient. " P. T. Barnum once 
exhibited an apparatus about as big as a pipe organ, 
built in the closest possible imitation of the human 
throat and vocal organs, which slowly and barely in- 
telligibly spoke a few words. How diif erent the phono- 
graph, whose design imitates nothing in Nature, but 
which is inspired by Nature. 

John H. Van Deventer has published an excellent 
study of the human body under the title, ''The Ulti- 



58 APPLYING EFFICIENCY PBINCIPLES 

mate Type of Management, " ^ in wliicli lie has this to 
say about its order system : 

We have something to learn from the model plant in this 
connection. The general manager (the cerebrum) does not 
take the time to give detailed orders. They are of the briefest 
description and to the point. His subordinates enlarge them 
and supply the details. He will say, "Let us go out for a 
walk." The action manager (the cerebellum) subdivides this 
order into, "Arise from the chair. "Walk to the hat rack. 
Pick out your hat and put it on. Open the door and pass 
out." Each of these is again subdivided into detailed orders 
for the muscles involved by the reflex centers or department 
heads. For any such simple action as above the detailed 
orders run into the hundreds. How long would it take you, 
for instance, to tell each muscle what to do in order to make 
you rise from your chair? You would have hard work to 
get all the necessary itemized commands on this page, even 
with fine type. 

Eeferring again to the analysis of the Chain of 
Command, and bearing in mind Van Deventer's study 
of the order system of the human body, we see that 
modifications and details added by each lower in au- 
thority in the chain are to suit the special circum- 
stances of his own command. Evidently, if there were 
no special circumstances, that is, if all conditions 
throughout the business were completely adapted, the 
chief could himself give orders which would carry 
without modification or addition of detail to their ulti- 
mate application. We are, of course, required to sup- 
pose that the chief has a central planning department 
to relieve him of the burden of personally working out 
the details of such orders. 

However, a moment's reflection will show that any 
such thing as absolutely complete adaptation of condi- 
tions is quite unattainable. In the measure that con- 

^ The Engineering Magasine, June, 1915. 



OKGANIZATION 59 

ditions are special, or unadapted, they can be known 
only by actual contact with them; and hence dealing 
with them must be left to the one who is in such con- 
tact. 

This gives rise to the necessity for dividing the 
order into two parts and of leaving to each lower au- 
thority the power to modify and to add detail. 

Hence, in giving any order, the chief has two prob- 
lems: 

To set clearly before the subordinate the proper 

Ideal and limits outside of which the subordinate has 

no discretion; and 

To allow the subordinate full discretion within 

those hmits. 

The second part of the problem is of no less impor- 
tance than the first and is equally necessary to efficient 
performance. 

In our industrial management the limits of discre- 
tion allowed to subordinates have usually been alto- 
gether too wide. In fact, everything has consisted in 
*' putting it up to" somebody or other. The president 
puts it up to the general manager, the latter to the 
factory manager, he to the superintendents and fore- 
men, and they at last to the men. For everybody it 
has been simply a more or less vague responsibility, 
often excessively and unreasonably enforced, and full 
discretion. It is no wonder that efficiency engineers, 
recognizing this as a cause of inefficiency, have some- 
times by a natural reaction gone too far in the other 
direction and have tended too much to prescribe every- 
thing from above and to deprive the successive links 
of the Chain of Command of their necessary discre- 
tion. 

55. It is evident that limitation of discretion can go 



60 APPLYING EFPICIENCY PRINCIPLES 

only step by step with adaptation of conditions, and 
that every one must be allowed full discretion to deal 
with the unadapted conditions with which he comes in 
contact. In dealing with these he must nevertheless be 
efficient. This must be accomplished by the applica- 
tion of Instruction. 

When it comes to pulling out the inefficiencies, Adap- 
tations and Instruction are the two jaws of the forceps 
to do the job. Adaptation must be set up as far as it 
will go, but it reaches its limits. Instruction must then 
close up on the inefficiency from the other side until 
it is firmly grasped and can be pulled out. This is 
more fully discussed in Articles 230, 231, and 241 to 
250. 

56. Whatever may be done by the application of the 
Principles of Efficiency or by any other means, we can 
not put a machine at the head of a human organiza- 
tion. That place must be filled by a real man. 

A certain great industrial organization has operated 
on less than half of its gross revenue, while about 
seventy-five per cent is considered the standard ratio 
in its line of business. I have never met a man more 
respected by his organization than its manager. His 
immediate ''limited number of subordinate command- 
ers ' ' unhesitatingly proclaim him as the prime mover 
of everything good that has been done in their de- 
partments. He has a committee on safety in whose 
work he is greatly interested and to which he gives 
much personal attention. His industry is hazardous, 
but the comparative safety of his employees is so well 
known that he has a waiting list of applicants from 
among the most desirable employees of his competitors. 
Through a welfare department he provides the means 
by which his men may be comfortably housed off duty. 



OKGANIZATION" 61 

as well as kept safe when on duty. For these things 
he is loved throughout the rank and file of his organi- 
zation. The newspapers not long ago reported that 
he had summarily discharged several hundred employ- 
ees of all grades for violation of his orders to abstain 
from alcoholic drinks, both on and off duty. Evidently 
he can, when necessary, make himself feared also. He 
is, in fact, respected, loved, and feared. 

These three things, respect, love, and fear, a supe- 
rior must win from his subordinates if he is to be in 
the highest degree successful. Many men command 
others with considerable success, while comparatively 
few are loved; but no one ever attained supreme dis- 
tinction as a leader and commander of men who did 
not make himself loved as well as feared and respected. 

57. Eef erring again to the analysis of Foster's state- 
ment of the Chain of Command, we have still to con- 
sider the subordinate commanders and privates. 

As to the former, each one is a chief to those below 
him, and we can therefore transfer what has been said 
above about the chief down successive grades and ap- 
ply it to successive subordinate commanders in turn. 

As to all the subordinates, there is another matter of 
supreme importance — team work. Under Ideals (Ar- 
ticle 28) and under Personnel (Article 36) I quoted 
from military writers on this subject. Another quota- 
tion from Knox is here in point. With particular refer- 
ence to the Navy, he says : 



To exercise their conmiand function properly the officer 
corps as a body must act unitedly. As a preparation to do 
this they must be educated in the art of war and trained 
in its conduct. They must be loyal to their Commander-in- 
Chief and his plans, and must possess a deep understanding 
of the mind of their common chief and of each other. 



62 APPLYING EFFIOIEE-CY PEINCIPLES 

In an unsigned article in the Edinburgh Review of April, 
1911, the statement is made that a sound, comprehensive, 
all-pervading doctrine (here used in a technical military 
sense roughly equivalent to "spirit of team work") of war 
is as important to an army as its organization. This is true 
to an even greater extent for a navy. 

To many officers doctrines are synonymous with principles ; 
to others, the word suggests methods, and still others confound 
it with rules. Wliile all of these are somewhat related, none 
of them may properly be considered as having the same mili- 
tary meaning. 

The object of military doctrine is to furnish a basis for 
prompt and harmonious conduct by the subordinate com- 
manders of a large military force, in accordance with the 
intentions of the Commander-in-Chief, but without the neces- 
sity for referring each decision to superior authority before 
action is taken. More concisely stated, the object is to pro- 
vide a foundation for mutual understanding between the 
various commanders during hostile operations. 

It is almost as essential to an industrial organiza- 
tion that there should be mutual understanding among 
its various members during peaceful operations. The 
necessary foundation is evidently a ''deep (and sym- 
pathetic) understanding of the mind of their common 
chief and of each other." 

In order that an athletic team may acquire team 
work, we recognize that there must be harmonious re- 
lations between the different members of the team, and 
that they must have had experience in working to- 
getlier. The same requirements were brought out in 
somewhat different terms in the discussion of Per- 
sonnel in the statements of the needs for scientifically 
selected and liarmonious personnel, and of perma- 
nence. The staff, which is discussed below, also has an 
important part in the development of this team work. 
(See Article 84.) 

When all has been done along these lines, much re- 
mains for the chief himself to do which can be done 



ORGANIZATION 63 

by him only. If he can and does make himself re- 
spected, loved, and feared, his organization has an 
excellent start toward team work. 

58. Admiral Mahan said that a chief can give orders 
properly only by having a close knowledge of details 
and then by ignoring them. What he meant was, not 
that the chief should ignore details, but that he should 
sum them up into their final resultant, and then give 
his orders accordingly. 

Personal experience of the details, and habits ac- 
quired by gradual progress through the grades of au- 
thority give the ability to do that, but present condi- 
tions continually force upon the man in general man- 
agement the charge of work of which he has had no 
personal experience. An engineer rises through grades 
in which his work has been purely technical, until he 
becomes works manager and finds himself responsible 
for an accounting department. A salesman rises to be 
sales manager, still dealing with problems of selling 
only ; but merit there makes him general manager, and 
he at once finds himself in authority over manufactur- 
ing. Either may go on to be president of the com- 
pany, and become the superior of its treasurer. Be- 
sides this, progress is continually filling in processes 
and methods behind and beneath a man, which were 
unknown when he was at that stage of his develop- 
ment, and with which he no longer has time to acquaint 
himself in detail. The only way to deal with this situ- 
ation is by being willing to take advice, and not only 
that, but by seeking it diligently from competent 
counsel. 

What, for example, does the retail druggist know 
about the confectionery business? Yet competition 
forces him to be a good deal of a confectioner. If he 



64 APPLYING EFFICIENCY PEINCIPLES 

has taken time to learn that as a side line, what chance 
has he of being also an expert window dresser? Yet 
the appearance of his windows is an important factor 
in attracting custom. If he has mastered all these 
things, when did he become an illuminating expert? 
Yet the public expects the drug store to be brilliantly 
lighted, and most expensively so if the illumination is 
not efficient. Here are three choice problems for a 
man who has probably been brought up as a pharma- 
cist. 

59. Forrest Crissey, in an article in the Saturday 
Evening Post, tells how the management of a chain of 
retail drug stores solves these problems : 

Almost every branch of the business has an expert, devel- 
oped in its own service, who is a traveling instructor in his 
particular line. For example, this chain has an expert soda 
dispenser who is a genius in his own line. As a compounder 
of fancy drinks he is an artist. The soda trade always de- 
mands something new, and this man is able to provide it, to 
give it an attractive appearance and a catchy name, and to 
build it of inexpensive materials. 

Immediately following his visit to the store will perhaps 
appear the candy specialist. She happens to be a woman, 
and is as much a wonder in her way as the soda fountain ex- 
pert is in his. Practically nothing is done in the candy line 
about which she is not consulted. Whenever a new store is 
opened she puts the candy department on its feet and gives 
it a good start. If the candy department in any store shows 
signs of weakness, she is immediately sent there to gear it up 
to higher speed and she seldom fails to do it. How ? Not by 
dealing in glittering generalities and selling a whole lot of 
the goods herself, but by patiently instructing the candy 
clerks in every detail of displaying, selling, and caring for 
candy. 

The expert window dresser is another itinerant feature, 
whose coming is looked forward to by the whole force of 
every store in the chain. The dressing of a window by this 
specialist is practically a demonstration of the extent to 



ORGANIZATION 65 

which goods may be made to sell themselves, and to call cus- 
tomers into the store, where the clerks may apply to them 
the painless but effective art of constructive salesmanship. 

The big city drug store, for example, must of necessity be 
something of a spendthrift in the matter of lighting bills. 
A large part of its business is done during the hours of arti- 
ficial illumination. By an unwritten law it must be so lav- 
ishly lighted as to make a bright blur on the landscape of the 
street. Consequently, the amount of electrical current con- 
sumed by any drug store of the Broadway, New York, type 
is almost beyond the belief of an average layman. 

There was no question in the minds of the executives of 
the organization under consideration but that its stores ought 
to be the best lighted of any in America. The chain man- 
agement takes nothing for granted, however; and, therefore, 
the general manager sent for the chief illumination expert 
of a great lamp and fixture concern and arranged with him 
for a preliminary survey of the lighting system of the chain 
stores in order to answer two questions: Could the expense 
of lighting be reduced without reducing its efficiency ? Could 
the stores be better lighted without increasing the light bill? 
His report was that an expert lighting engineer could so 
rearrange the whole system as materially to increase its effec- 
tiveness and at the same time make a decided and permanent 
reduction in its cost. 

Such an engineer was engaged, and he overhauled the light- 
ing arrangements of each store and made a blue print of the 
system, showing each socket, the kind of bulb and the candle 
power that should be used in it. One copy was, of course, 
left with the local manager, and the others were filed at head- 
quarters for the use of the management and those entrusted 
with the enforcement of the new lighting rules. The net 
result of this adventure in economy, as stated by the official 
who instigated it, was a saving of about twenty thousand 
dollars in the first year of its operation. 

Many elements entered into this economy that helped to 
swell it to sensational proportions. A more economical type 
of lamp or bulb was used, and the light sockets were relocated 
and rearranged on a plan dictated by the principles of scien- 
tific illumination instead of guess work; reflectors, diffusers, 
and other aids to the highest utilization of light were in- 
stalled. All this permitted a radical reduction in the candle- 
power of the lamps used. 



66 APPLYING EFFICIENCY PEINCIPLES 

The soda dispenser, tlie candy specialist, the win- 
dow dresser, and the two illuminating engineers are all 
examples of staff ; the first three, of regular or organ- 
ized staff, and the last two of what, in these articles, 
will be called casual staff. 

60. Organization ought, in fact, to be divided into 
two parts, line and staff. Those people who are di- 
rectly engaged in the production of results are usually 
organized as line, the staff is auxiliary. In the old- 
est organized human activity, infantry, cavalry, artil- 
lery, and the aviation corps are line; the rest of an 
army is staff. In industry three divisions of line are 
recognized, finance, sales, and manufacture; and the 
rest is staff. Particular activities are sometimes diffi- 
cult to assign, but the outline classification holds good. 

61. Industrial managers have been especially re- 
luctant to recognize the need of an efficiency staff, and 
have commonly held that it was wholly the duty of the 
line to secure efficiency. There can indeed be no effi- 
ciency without the co-operation of the line, but neither 
can the line alone give it adequate attention. Such ex- 
amples of close analytical studies as are given in the 
time studies in Article 166 and in Chapter X are alone 
enough to show that betterment requires a minute at- 
tention to details which the line, burdened as it is with 
responsibility for continuous production, cannot give. 
Also the duties are inconsistent with each other. One 
can not concentrate all his powers on the minute study 
of details and, at the same time, retain that wide view 
of the field which is necessary to a line commander. 

62. When the candy specialist is visiting a store, 
whose orders are the candy clerks at the counter to 
obey — the regular manager's, or the specialist's? 

Before answering this question, let it be remembered 



ORGANIZATION" 67 

that any division of authority and of responsibility is 
a very serious defect in organization. 

Evidently unity of authority and responsibility can 
be maintained only by having the store manager retain 
his full control. This is an example of the fact that 
authority belongs to the line. 

How then is the candy specialist to accomplish re- 
sults 1 In Crissey 's own words, ' ' by patiently instruct- 
ing the candy clerks." The function of the staff is, 
then, to instruct ; and, in order to do this, it must have 
knowledge, which is as distinctively the attribute of 
the staff as authority is of the line. 

Suppose that the store manager resents the presence 
of the candy specialist as an intrusion. Suppose he 
uses his authority to thwart her in every way. Sup- 
pose he even orders her out of the store. The staff 
functionary should obey. Strong organization re- 
quires, as stated by Major Hine,^ reorganizer of the 
Harriman lines, that all lines of authority should be 
brought together in one person as low down in the or- 
ganization as possible. This person, foreman, sub- 
foreman, or straw boss, alone gives orders to the work- 
ers under him, and he alone is immediately responsi- 
ble for their work. On the one hand no one can dispute 
his authority, and on the other hand he can not evade 
his responsibility. 

The only proper way to give the candy specialist 
authority over the local candy clerks is to make her 
temporarily an intermediate link in the chain of com- 
mand between them and the manager of the store and 
thus, for the time being, a member of the line. 

As a consequence of giving full authority to the line, 

*" Principles of Organization," by Charles Delano Hine; The Engi- 
neering Magazine Co. 



68 APPLYING EFFICIENCY PRINCIPLES 

it must also assume full responsibility. The store 
manager, and not the candy specialist, should be held 
responsible for keeping the candy business of the store 
up to the proper Standard. If he is strictly held to full 
responsibility, either he will welcome all the help he can 
get from every staff expert that is sent to his store, or 
he will soon be displaced for failure to meet the stand- 
ards. However, to avoid delay for such automatic ac- 
tion, the staff should have complete freedom to appeal 
to higher authority. Any staff functionary whose ad- 
vice is not heeded by the line should satisfy himself 
as to whether that inattention was justified; and if 
satisfied that it was not, should carry an appeal all the 
way up to the board of directors, if necessary. 

The line may be perfectly justified in disregarding 
staff advice, even though that advice in itself may be 
perfectly correct. The staff member, being a special- 
ist, necessarily has a specialist's limited view of the 
situation. The line, from its wider view, may see 
that the staff advice, though good in itself, is incom- 
patible with the general situation. In such a case, the 
reason for rejecting the advice ought to be explained 
and the staff ought to be satisfied. 

63. Harrington Emerson tells the story of a de- 
partment foreman and his staff planner, who were al- 
ways quarreling and complaining of each other. To 
put a stop to this, the two men were interchanged. The 
new planner, with a great appreciation of the fore- 
man's troubles, always tried to plan to make things 
easier for the foreman ; while the new foreman, know- 
ing full well how hard it was to plan efficiently, made 
every effort to carry out the plans. 

This scheme is a regular feature of the United States 
Army, in which, as far as possible, officers are detailed 



OKGANIZATION * 69 

back and forth between staff and line duty. It evi- 
dently soon finds its limits in the personal fitness of 
individuals for different kinds of work, but in so far 
as it is applicable it is very effective in reducing fric- 
tion between line and staff. 

64. In applying these generalizations, full use must 
always be made of Higher Common Sense. For exam- 
ple: As a general principle, the staff is without au- 
thority ; but no competent staff will lack the authority 
that comes from knowledge. The captain of a ship at 
sea is as perfect an example of full and undisputed line 
authority as exists. Even the owner, if abroad and 
at sea, must obey the captain. Yet the ship's doctor, 
a member of the staff, has in one respect an authority 
exceeding even that of the captain, in that he can at 
any time deprive the latter of his command by declar- 
ing him incapacitated ; but if the doctor should do this, 
authority would remain in the line, passing unim- 
paired to the next subordinate line officer. 

65. At best co-operation between the staff and the 
line is no easy matter ; and this emphasizes the neces- 
sity for the selection of a harmonious personnel and 
team work pointed out in the chapter on Personnel. 

Evidently, organization has a soul as well as a body, 
and all attempts to build up the body without ani- 
mating it with a soul leaves it only a dead and useless 
thing. 

The soul of an organization is its spirit of team 
work, known to military men as '' doctrine," which has 
already entered into this discussion. Lieutenant Com- 
mander Knox, writing of this subject with particular 
reference to the United States Navy, says that the first 
and most essential step in indoctrinating a military 
service so as to assure co-ordinate action during hos- 



70 APPLYING EFPICIEN-CY PRIN-CIPLES 

tilities, is to formulate a "concrete, comprehensive, and 
coherent conception of modern war." Paraphrased 
into terms of efficiency principles, this means that the 
head of the organization shall adopt for himself cor- 
rect Ideals and shall inspire his subordinates with them 
and with subsidiary Ideals consistent with them. A 
re-reading of the chapter on Ideals will be useful at 
this point. 

66. Turning again to the body of Organization, as 
a knowledge of anatomy is valuable it may be well to 
sketch its structure. This is shown in Figure 1. It 
must be remembered that organization is subject to so 
many modifying influences that any diagram of this 
kind, unless closely limited to some particular case, 
must be regarded as suggestive only. 

In the diagram, line functions are shown by rec- 
tangles and staff functions by circles. Line authority 
from every person to his next lower in authority in a 
chain of command is shown by a full line. All relations 
from which authority is lacking are shown by broken 
lines. For example. Figure 1 shows with reference 
to the Factory Manager : 
That he is a line officer ; 

That his next line superior in the chain of com- 
mand is the President, or General Manager, who is 
the only person having authority to give him orders 
which he is required to obey; 

That the persons next lower in authority to him 
in the chain of command are the Purchasing Agent, 
the Factory Superintendents, the Chief Planner, the 
Chief Store-keeper, and the Head of the Experi- 
mental and Research Department, to whom alone he 
should issue his orders; 

That he is advised, as his immediate personal 



MANUf^A CTUHINO 




Manufacturino 




PIG. 1. DIAGRAM OF LINE AND STAFF OKGANIZATION. See Article 66. 

Rectangles Show Line Functions — Circles Show Staff Functions. 



OKGANIZATION 71' 

staff, by the Chief of Staff, by the Technical Ex- 
perts, by the Head of Department of Standards, and 
by the Employment Supervisor. 
67. In the main, the diagram of Figure 1 is self-ex- 
planatory, but some discussion may make it plainer. 
In so far as possible the chain of command is worked 
through the line only. This often results in putting 
some staff functionary in a chain of command as a 
direct subordinate to some member of the line. For 
example, the Factory Manager must necessarily con- 
trol the planning for the factory. In order to do this 
he must have authority to tell the Chief Planner what 
to plan, and to give such orders with reference to the 
plans as are consistent with leaving the Chief Planner 
necessary discretion. The Chief of Staff also exer- 
cises some control over the Chief Planner, but his in- 
terest is limited to seeing that efficient methods of 
planning are employed and that the plans finally work 
out into good shop efficiency. The needs of the Fac- 
tory Manager require authoritative action and prompt 
obedience. For this reason the Chain of Command is 
represented as running from him to the Chief Planner, 
a staff officer, instead of to the latter from the Chief 
of Staff, his immediate staff superior. 

Similarly, every foreman of a shop department is 
represented as having a staff consisting of one or more 
inspectors, an instructor, a time-study man, and a de- 
partmental despatcher. Line authority over the in- 
structor and the despatcher is represented as belong- 
ing to the foreman instead of to their respective staff 
superiors. In the case of the departmental despatcher, 
who is the local member of the planning staff, the rea- 
son for this is similar to the reason for placing the 
Chief Planner under the line authority of the Factory 



72 APPLYIITG EFFICIENCY PBINCIPLES 

Manager. The instructor is placed under the foreman, 
because it is desirable that the foreman should have 
the authority to tell him whom to instruct and when. 

In the case of the inspector, such an arrangement 
would not be satisfactory. The foreman has consider- 
able interest in having as much of his product passed 
as possible, and this may be intensified by his Efficiency 
Eeward. To counteract this, it is correct organiza- 
tion to place the departmental inspector under the au- 
thority of the Chief Inspector, and to make him ad- 
visory only to the foreman. 

In some particulars it may be necessary to give the 
departmental inspector authority exceeding even that 
of the foreman. The inspector ought always to see a 
job as soon as possible after work has begun, because 
it is even more important for him to prevent damage 
than it is for him to reject defective product. I have 
had one case in which, in order to enable an inspector 
to accomplish the first purpose, I had to obtain from 
the management authority for the inspector absolutely 
to order a shut down of any operation which he saw 
to be producing excessive damage. In such a case, 
the set-up for the job had to be gone over and cor- 
rected before the foreman could allow it to continue. 

68. It is only in very rare and exceptional cases that 
the statf has authority over the line, but there are 
several chains of command which run from superior 
in the staff to subordinate in the staff, the superior 
having full line authority over the subordinate. For 
example, the Chief of Staff is responsible for seeing 
that the Chief Inspector has correct specifications, that 
he has proper equipment for making the necessary 
tests, and that his department uses correct testing 
methods. The line officers whose work the inspection 



OKGANIZATIOlSr 73 

department directly touches, the Purchasing Agent, 
the Chief Store-keeper, and the Superintendents of 
factory departments, are none of them competent to do 
anything more about inspection than to advise in the 
drawing of specifications ; therefore the Chief Inspec- 
tor is represented as standing in only an advisory re- 
lation to them, and as being under the full line au- 
thority of the Chief of Staff. 

69. Wherever efficiency can be increased by cutting 
the corners of the channels of authority shown on the 
diagram, that should be done in ordinary routine. 
For example : The diagram indicates that the Store- 
keeper of finished stock on finding his stock of any ar- 
ticle running low will make a requisition for a new 
supply and forward it to the Chief Store-keeper. The 
latter, if he approves, will sign the requisition and 
forward it to the Factory Manager. The latter, if he 
approves, will order the requisition filled, and forward 
it to the Chief Planner. 

The latter will analyze the requisition as to factory 
departments and distribute these divisions of the 
requisition among the subordinate planners of the Cen- 
tral Planning Office for them to work out the neces- 
sary orders to the factory. The subordinates will re- 
turn these orders to the Chief Planner who, if he ap- 
proves them, will forward them to the Factory Mana- 
ger. The latter, if he approves, will forward them to 
the Factory Superintendents concerned, who will for- 
ward them to the respective Foremen. 

In the above procedure, the Superintendents are 
mere conduits. As to the Factory Manager, the Chief 
Store-keeper, and the Chief Planner, they can not in- 
telligently approve or disapprove the matters thus put 
up to them by their subordinates unless they burden 



74 APPLYING EFFICIENCY PKINCIPLES 

themselves with detail work of which it is intended 
that these very subordinates should relieve them. As 
it is physically impossible for these superiors to do 
the detail work, in actual practice they merely rubber- 
stamp the orders and requisitions, and eventually turn 
even that operation over to a clerk. The next step in 
degeneration is for the clerk to take upon himself the 
actual judgment and discretion over matters on which 
he is entirely incompetent to pass. 

It is, of course, necessary that the chiefs above men- 
tioned should have authority to disapprove at any 
time any action of their subordinates, and that they 
should have the power of initiative in matters which 
the regular routine may not have caused their subordi- 
nates to start. Therefore the lines of authority have 
to run as shown in the diagram ; but in actual practice 
red tape is cut out and procedure is made more efficient 
if the Store-keeper of Finished Stock sends his requisi- 
tions directly to the Chief Planner, who divides the 
work among the subordinate planners of the Central 
Planning Office, and they prepare the manufacturing 
orders and send them directly to the Foremen con- 
cerned. 

70. For any particular case, the diagram may be in- 
complete. For instance, in some or all departments, it 
may be necessary for the Head of the Department of 
Standards to have both a Time-Study Man and also 
a Material- Study Man. 

71. There should be full freedom of consultation by 
everybody in the organization with everybody else who 
can give him information of value — ^within the limits 
of Common Sense, of course. We should not, for ex- 
ample, expect one of the workmen to go to the Presi- 
dent for advice or instruction. It would be impossible 



OEGANIZATION 75 

to represent this freedom of consultation on the chart ; 
so all that can be said is that nothing on the diagram 
should be taken as limiting it in any way. 

72. It is impossible in a diagram of a general char- 
acter to mention in detail even some offices which com- 
monly exist. For example, the Master Mechanic may 
be considered as being represented on the diagram by 
one of the Superintendents, and the Mill-wright by one 
of the latter 's Foremen. The Chief Engineer, simi- 
larly, may be considered as being one of the Techni- 
cal Experts of the diagram. 

73. For any particular case, the diagram may be 
excessive — an Experimental and Eesearch department 
is comparatively rare, rarer than it ought to be. 

74. For any particular case, it may be necessary to 
modify the diagram. For example, it may be neces- 
sary, in order to give some foreman enough control 
over his materials, to make the Store-keeper of that 
department a line subordinate to its Foreman, instead 
of to the Chief Store-keeper. If this were done, the 
Foreman would draw his supplies in large quantities 
for his store-room on requisition and the Chief Store- 
keeper would be credited with them. They would then 
pass to the departmental store-room and the Foreman 
would become responsible for them. 

Another common modification is to make the Chief 
Engineer the head of all the Technical Experts, and 
to place the Experimental and Eesearch Department 
under him. This department is commonly modified 
into a Department of Design and Tests. 

75. Theoretical organization is also modified, often 
greatly so, by the application of the principle of Per- 
sonnel. A Financial Manager may have peculiar apti- 
tude along some scientific line connected with the in- 



76 APPLYING EFFICIENCY PEHsTCIPLES 

dustry, and, in order to make full use of this, it may 
be necessary to tolerate anomalous relations between 
Finance and the Experimental and Eesearch Depart- 
ment. We may have in one department a foreman 
who is a good executive, but only a passable mechanic 
and not adapted to teach his men. We shall have to 
place in his department strong staff representatives of 
inspection and instruction, while it may be possible to 
leave departmental planning largely to the foreman's 
personal ability. Elsewhere we may have a foreman 
who is highly skilled in his art and is an excellent 
teacher, but lacks executive ability. If his department 
is not too large, he may be his own inspector and in- 
structor, but he will need the support of a strong 
planning staff. 

The Army, the Navy, and the Eoman Church have 
organizations which are almost independent of per- 
sonal considerations ; but in order to operate these or- 
ganizations successfully, they have to catch their Per- 
sonnel young and plastic, and minimize personal dif- 
ferences by moulding it in an iron Discipline. Until 
industry can do the same thing, it will have to make 
considerable concessions to Personnel in applying the 
principle of Organization. 

On the other hand, many industrial organizations 
have conceded entirely too much to personality. They 
are, in fact, merely natural growths which have fol- 
lowed always the lines of least resistence at the mo- 
ment, with little or no regard for correct organiza- 
tion. Many inefficiencies have been introduced in this 
way which can be eliminated by correcting the organi- 
zation. 

However, the case is one of conflicting requirements 
like many others which are familiar to the engineer, 



OEGANIZATION 77 

and, as in all such cases, the proper solution is to make 
the best possible working compromise. 

76. The diagram. Figure 1, deals with functions. In 
any actual organization as many of these may be un- 
dertaken by one individual as his time and ability will 
allow. In a small organization this may be a good 
many. In a small plant, the functions of the Chief 
Store-keeper and of all the subordinate store-keepers 
may be discharged by one man. In a still smaller or- 
ganization, he may be Purchasing Agent as well. 

Again, one man may be both Inspector of Eaw Ma- 
terials, a member of the staif inspection corps headed 
by the Chief Inspector, and also Material-Study Man, 
coming under the Head of Department of Standards. 

77. As shown by the diagram, this functionary as 
Inspector of Eaw Material is also staff to the Eaw 
Material Store-keeper. 

Where an individual thus owes a divided allegiance 
it is necessary clearly to differentiate his functions and 
to define the authority over each one. If this can be 
done and, still better, if the times when he is occupied 
in any one function can be clearly set off from all the 
others, no conflict of authority or division of respon- 
sibility need arise from this situation. 

Unity of authority and responsibility is nowhere 
more insisted upon than aboard a man-of-war, and no 
organization is more efficient; but the enlisted man 
in the Navy comes under one officer when on watch, 
under another when at his battle station, and under a 
third when on boat duty. But there is never any 
doubt as to what officer has authority over him and is 
responsible for him at any particular time. 

In the staff, these cases of divided allegiance are 
very common, as a study of Figure 1 will show. Take, 



78 APPLYING EFFICIENCY PEINCIPLES 

for example, the case of the individual who is sup- 
posed to be both Inspector of Raw Materials and Ma- 
terial Study Man. The Raw .Material Store-keeper 
tells him what to inspect and when, the Chief Inspector 
tells him how to inspect, and the Head of Department 
of Standards requires from him reports of data on 
which to base standards of materials. 

We have here a case of functional control. It is 
a form of ''division of labor," or specialization, and 
as such makes for higher efficiency; but it endangers 
one of the fundamental principles of Organization, 
unity of authority and responsibility. This danger 
must be guarded against, as above explained, if func- 
tional control is to be employed with efficient results. 
It is therefore best to organize as far as possible, so 
as to have in the line, which is immediately responsi- 
ble for producing results, unity of control assisted by 
staff advice, and to throw all functional control into 
the staff where friction does not so vitally affect imme- 
diate results. 

78. While it is the distinguishing function of the 
staff to advise the line, staff officers may be advised by 
other staff officers and by line officers as well. For 
example, the Chief Inspector, a member of the staff, 
not only advises and is advised by the Technical Ex- 
perts, the Head of the Department of Standards, and 
the Employment Supervisor, staff officers, but also 
advises and is advised by the Purchasing Agent, the 
Chief Store-keeper, and the Superintendents, line offi- 
cers. In order to enable these people to deal harmoni- 
ously with matters of inspection, it is well to bring 
them all, except the Employment Supervisor, together 
into an organized committee. This question of com- 
mittees is discussed further in Article 83. 



OEGANIZATION 79 

79. Some features of the Diagram of Organization — 
for example, the planning organization — will be best 
understood if Figure 1 is consulted in connection with 
the discussion of those principles of efficiency with 
which they are immediately concerned. 

80. Suddenly to make over the organization of many 
operating concerns into any theoretically correct form, 
would be like cutting a man open and at once per- 
forming on him several serious operations of abdom- 
inal surgery. They might all be needed to restore him 
to health, but if they were all performed at once, he 
would probably die of shock. The surgeon has to pro- 
ceed more gently — prepare the patient, and then per- 
form one operation at a time with proper periods of 
convalescence and rest between. Similarly, the proper 
way to correct an organization would usually be to 
design that organization carefully and to record the 
design in permanent form, and then gradually to make 
over the organization from the existing to the desired 
form. 

81. Many concerns do not clearly understand what 
their organization is, to say nothing of what it ought 
to be. This ignorance always leads to internal friction 
and inefficiency. There can be no question that every 
concern ought to work out an analysis of its existing 
organization and to have it thoroughly understood, at 
least by all the officers of the company. On this point 
Kimball^ says: 

It is not good policy to keep men in uncertainty of their 
position in the organization, and when several men are on 
the same authoritative level their several fields should be 
carefully prescribed and their efforts carefully co-ordinated. 
This is particularly true when a considerable amount of staff 

* Dexter S. Kimball, Principles of Industrial Organization, McGraw- 
Hill Book Co. 



80 APPLYING EFEICIENCY PRINCIPLES 

organization is introduced, since this tends naturally to weak- 
en the disciplinary effects of line control; and where staff 
organization is used to any marked degree special care must 
be used to supply co-ordinative influences to compensate for 
this weakness. 

While a certain amount of co-ordination can be accom- 
plished by personal influence, it is obvious that, where large 
numbers of men are involved, or where preplanning of the 
work is necessary, written documents must be resorted to. 
For instance, an authoritative diagram facilitates a clear 
understanding of the relations between the several officers 
and departments. In some cases the detail duties and author- 
ity of men and departments are issued in written form and 
copies of these instructions are bound up into an organiza- 
tion record that serves as a permanent record of the organi- 
zation. Whether such a volume is necessary or not, the duties 
of men and departments should be issued in writing, and 
necessary adjustments between men made by some one higher 
up, and not allowed to remain a constant source of irritation 
and dispute. The specifying of the duties of the several 
men has the added advantage of compelling the organizer to 
think out his plan of organization with the same care that 
the designer of a machine bestows upon the several parts to 
insure smooth running. 

One of the things which is most apt to require im- 
mediate attention in any improvement of Organiza- 
tion is the relief of executives from routine and cleri- 
cal duties that can just as well be done by cheaper 
men, in order that they may have time to use their 
brains effectively in the discharge of their own proper 
duties. This is especially apt to be true of shop fore- 
men. It is no uncommon thing to find them slaving at 
their desks, writing orders, recording production, and 
making out reports, all of which could be better done 
by a good clerk, while their departments are suffering 
from lack of their attention. This is an example of 
the fallacy that low ratio of overhead to direct cost is 
an indication of efficiency, and of the fact that this 
fallacy is an actual obstacle to efficiency. The em- 



OEGAFIZATION 81 

ployer, holding to this fallacy, not only thinks that he 
is saving the wages of a clerk, but that he is increasing 
his efficiency by so doing. On the contrary, he is pay- 
ing most extravagantly for the clerical work and is 
also undermining the efficiency of the department, for, 
while the foreman's nose is buried in the papers on 
his desk, his department will be found operating at 
gross inefficiency, and parts of it may be actually idle 
and out of work from sheer inability of the foreman 
to get around and tell the men what to do. This sort 
of thing is not the fault of the official immediately 
concerned, but of those higher up who, from false ideas 
of economy, make it impossible for him to do his work 
well. 

Adequate staff organization is one of the best means 
of relieving executives of the burden of details. Thus, 
in Figure 1, the Factory Manager is represented as 
being relieved of burning the midnight oil to dig out 
for himself required technical knowledge, by the ex- 
pert advice of the Chief of Staff, the Head of the Ex- 
perimental and Research Department, the Technical 
Experts, and the Head of the Department of Stand- 
ards ; and as being relieved by the Chief Planner from 
attention to the details of the progress of orders 
through the plant. Near the other end of the organi- 
zation, every foreman is represented as being relieved 
by members of the staff of the details of employment, 
inspection, instruction, study of operations and condi- 
tions, and despatching of work in progess. This re- 
lief to the foreman should, of course, be made either 
more or less, according to circumstances. Its object is 
to enable him to give adequate general attention to his 
whole department by not having to concentrate his 
personal attention long on any detail. 



82 APPLYING EFFICIENCY PRINCIPLES 

82. In the above, the Head of the Experimental 
and Eesearch Department and the Technical Experts 
are considered as reaching out into the fields of knowl- 
edge and bringing to the line an acquaintance with the 
laws of Nature, which it could not have otherwise; 
and the other members of the staff are represented as 
doing this and also as bringing to bear upon the de- 
tails of operations within the plant a closeness of at- 
tention which it would be impossible for the line alone 
to give it. 

The latter aspect of the work of the staff is closely- 
analogous to that of the sympathetic nervous system in 
the body, of which Van Deventer says: 

It is evident that the less those who plan and execute are 
concerned with strictly routine matters, the more effectively 
will the work be done. So important is this principle, that 
the Great Designer saw fit to organize a distinct branch of 
management to take care of the routine. So that, without 
thought, the heart beats, we breathe, the digestive and other 
vital organs perform their functions. Think of the burden 
that would be thrown on the general manager (the cerebrum) 
and the action department (the cerebellum) if the routine 
department (the sympathetic nervous system) did not exist. 
If these thousands of simultaneous efforts required conscious 
thought and planning, what time would there remain in 
which to think about science or art or literature or new inven- 
tions? 

83. With reference to the amount of staff shown in 
Figure 1, the manager of a small organization should 
remember that the diagram represents functions ; and 
it may well be that a careful re-design of the organi- 
zation will result in so much increase of the efficiency 
of individuals that one person may fulfil several of the 
functions shown. For example, a line head of depart- 
ment may be able to be staff adviser to the rest of the 
organization in matters of his own specialty. 



ORGANIZATION 83 

In a certain works the sale of the product is very- 
dependent upon its appearance. It was indicated 
above that design would be placed either in the Ex- 
perimental and Eesearch Department, or under one 
of the Technical Experts. In this case, due to the great 
effect of design upon sales, a justifiable modification 
is made by placing design under the Assistant Sales 
Manager, but he can not be expected to know its effect 
upon factory efficiency. The superintendent of the fac- 
tory, the master mechanic, and the efficiency engineer, 
all from different angles, have knowledge of the lat- 
ter. All four of these officials are therefore brought 
together in a Committee on Design. In this case, the 
committee exercises staff functions only. It can ad- 
vise the assistant sales manager, but the authority over 
and responsibility for designs rests with him only. 
Any other member of the committee, however, has full 
right of appeal from his decisions to higher authority. 

Whether a committee should be staff to one or all of 
its members, or whether it should have line authority 
over any or all of them, is a matter of expediency in 
every case. Before giving a committee line authority, 
it must be seen that no chain of command will be 
broken, and that authority and responsibility will not 
be weakened or divided. 

Further relief from excessive staff personnel may 
be obtained by the use of what is above called ''casual 
staff. ' ' Casual staff members may be only temporary 
— ^for example, there is the consulting expert, who may 
be called in when his services are required. 

A great deal of competent counsel may be obtained 
from Government and other bulletins and from techni- 
cal publications. The practice of one of the two most 
efficient industrial organizations with which I have 



84 APPLYING EFFICIENCY PRINCIPLES 

ever come into contact is of interest in this connection. 
As I shall have to speak of this organization several 
times, I shall for convenience call it the X. Y. Z. Com- 
pany. It took a large number of technical publications. 
Every one of them on arrival was gone over and in- 
teresting matter was marked, ''Attention of Mr. 
Blank. ' ' The publication was then circulated through 
the organization, and every member was expected to 
study matter marked for his attention. 

There is also a usually unworked mine of compe- 
tent counsel in the members of the organization from 
the top to the bottom. In the X. Y. Z. Company, sev- 
eral monthly cash prizes were offered for the best sug- 
gestions, and everybody in the organization was en- 
couraged to offer them. If anyone of the grade of 
foreman or higher failed for any considerable time to 
make a suggestion, this encouragement took the form 
of a sharp inquiry as to whether he had gone to sleep. 

Complaints are a form of suggestion and may often 
contain matter of value. The chronic kicker ought to 
be suppressed, but complaints from other sources 
should have prompt and fair attention. The Employ- 
ment Supervisor furnishes a proper channel through 
which this can be given without burdening the line. 

Exchange of ideas with others is also a valuable 
source of competent counsel. Associations of per- 
sons having the same interests, like the engineering 
and technical societies, furnish a convenient medium 
for this exchange. 

Added to the above is the salesman, who carries 
ideas about as the honey bee carries fertilizing pollen 
from one flower to another. The practice by some con- 
cerns of having definite office hours during which some 
officer of the company receives salesmen and gives 



OKGANIZATION 85 

careful attention to what they have to say is worthy 
of imitation. 

84. Military writers recognize that it is one of the 
functions of the staff to develop that spirit of team 
work, which they call ''doctrine." It is important to 
see whether the staff has the same important function 
in industry. Analyzing the statements which have 
been made in reference to military ''doctrine," where 
that subject has already come up, under Ideals (Article 
28), Personnel (Article 36), and Organization (Ar- 
ticle 57), it appears that its development is dependent 
upon ideals, instruction, discipline, fair deal, perma- 
nence of personnel, co-ordination and co-operation, rec- 
ords, efficiency reward, standards, and higher common 
sense. Eeferring to Figure 1 and the preceding dis- 
cussion, it appears that instruction is dependent upon 
the Chief Instructor; discipline, fair deal and perma- 
nence of personnel, very largely upon the Employment 
Supervisor; co-ordination and co-operation, upon the 
Planning Department (and' it will appear when plan- 
ning is taken up that records and efficiency reward also 
depend very largely upon that department) ; and stand- 
ards are dependent upon the Head of Department of 
Standards. All of these functionaries are members of 
the staff, and higher common sense is peculiarly the 
affair of the staff as a whole. As the line also comes 
in on all these matters, we should not lay the respon- 
sibility for the development of team work in industry 
entirely upon the staff; but certainly it has such an 
important part to play in it, that proper team work 
must be impossible to obtain in any organization in 
which adequate provision is not made for the discharge 
of staff functions. 

85. In our industry the line is usually much better 



86 APPLYING EFFICIENCY PEIFCIPLES 

developed than the staff ; and it is therefore necessary 
in this discussion to lay great emphasis upon the staff, 
but, in so doing, we must not forget the importance 
of the line. 

Good line organization is above all effective in deal- 
ing with unforeseen and unadapted conditions. In 
such a situation it is like the human hand, in that it 
is able to wrap itself about the oddest shapes and to 
handle them powerfully. Police quelling a riot, fire- 
men extinguishing a blaze, and soldiers in battle are 
examples of the ability of good line organization to 
deal with emergencies; and it is in those organiza- 
tions which deal most with emergencies that we find 
the most highly developed line. 

To take away the line entirely is to deprive organi- 
zation of its ability to deal with unforeseen and un- 
adapted conditions. It is to deprive it of its backbone, 
the Chain of Command, and render it invertebrate. 



Chapter VII 
EECORDS— PLANNING AND DESPATCHING 

INTEODUCTOEY MEASUEES 

86. 

IN the theory of efficiency, Eecords and Planning 
and Despatching are two separate principles, but in 
practical application they are Siamese twins which 
can not be cut apart without killing them both. 

Discussions of these two principles are apt to leave 
one with the feeling that his own needs have not been 
met. This results from the fact that their applica- 
tion has to connect so closely with the practical de- 
tails of the work that any discussion is apt to deal 
so exclusively with some assumed or actual case that 
it has very little application to any other, or else to 
run to the opposite extreme and be composed of such 
generalities that it is very difficult to apply it to any- 
thing. 

These two principles are like swimming, in that they 
can be learned only in doing the actual thing. How- 
ever, no greater service can be rendered to a boy who 
is learning to swim, than to teach him to get down into 
the water up to his nose and let it support him. When 
he has mustered courage to do that, he finds that the 
water bears him with practically no effort on his part, 
and that the stroke is of only secondary importance. 

87 



88 APPLYING EFFICIENCY PRINCIPLES 

So it may be of service to indicate to the manager 
some principles of Eecords, and of Planning and 
Despatching. If he will apply them and will get after 
his planning, despatching, and records with determina- 
tion, he will find that the particular methods and forms 
that he uses in carrying out these principles are of 
only secondary importance. 

As to forms, there is about one chance in a million 
that any one form can be transferred from any plant 
to another without re-designing it. In these articles 
it is therefore put squarely up to the efficiency prac- 
titioner to design his own forms. Such discussion as 
may help him in so doing is given ; and illustrative ex- 
amples, not models, are given of a few forms which 
require only minor modifications in adapting them 
through a wide range. 

87. Planning is necessary for three purposes: 
To prepare in advance for what is to be done ; 
To co-ordinate all lines of activity so that they 

work together to achieve the common Ideal, and 
To concentrate all available force upon the work 

in hand. 

Despatching is guiding the execution of the plans. 

The provision of necessary material and personnel 
requires advance preparation, which must be planned. 

The co-ordination of separate activities requires 
each to be designed to fit in with every other; that is, 
that they be planned. 

In order to focus the available force upon the work 
in hand, the management must be sure that no other 
work is being neglected. It can have this assurance 
only by providing for every item of work its time and 
place for sufficient attention, and this can be done only 
by planning time and place for all the work. 



RECOEDS — PLANNING AND DESPATCHING 89 

88. It is evident that any failure to accomplisli any 
of the three purposes above stated must lead to a loss 
of efficiency. It is also evident that work cannot go 
on unless somebody decides to put certain jobs into 
work at certain times, with the use of certain men, 
equipment and materials ; and the making of these de- 
cisions is at least a rudimentary planning. It is 
further evident that any improvement that can be 
made in this rudimentary planning will at once in- 
crease the efficiency. It is therefore possible very 
early in betterment work to make financial gains by im- 
proving the planning, and this marks planning as one 
of the first matters for attention. 

89. On the other hand, if it is suddenly discovered 
that the plant is out of some needed article of stores, 
plans are upset. If workers are continually leaving, 
and new ones have to be taken on in their places, the 
uncertain and unskilled labor of green hands disar- 
ranges the plans. In short, every inefficiency in the 
plant interferes with planning. Hence, planning can 
not be perfected until every other principle of effi- 
ciency has had its full application. 

90. On the one hand, the importance of planning 
and the possibility of early gains by improving it mark 
it as one of the earliest steps of betterment; on the 
other hand, its dependence upon every other measure 
of betterment shows that it is impossible to introduce 
well developed planning at the outset, and that its de- 
velopment can only go step by step with other im- 
provements, and that advantage ought to be taken of 
every other improvement to make some gain in plan- 
ning. 

91. The immediate question is how to make an 
early start at planning. This is dependent upoii the 



90 APPLYING EFFICIENCY PRINCIPLES 

existing state of planning, and therefore is different in 
every case, but a few fundamental principles will al- 
ways apply. 

The Ideal in planning is to obtain a coincidence of 
certain events as to time, and sometimes as to place. 

Suppose an order is about to go to a group of de- 
partments, 1, 2 and 3, for an article composed of parts 

A, B, and C. Department 1 makes parts A and B. De- 
partment 2 makes part C. Department 3 assembles A, 

B, and C into the finished article. The superintendent 
of the three departments knows when he wants the 
finished article. The foreman of Department 3 knows 
in about what time he can assemble it. Similarly, the 
foremen of Departments 1 and 2 know roughly how 
long it will take their departments to make the parts 
required of them. The four men have among them 
the knowledge, though probably only to a rough ap- 
proximation, that is necessary to plan the main out- 
lines of the progress of this order through the three 
departments. If they are brought together, the super- 
intendent can state when he wants the article ; the fore- 
man of the Assembly Department can state when he 
wants the parts ; the foremen of Departments 1 and 2 
can state the possibilities of their departments; then 
the superintendent and the other foremen can adjust 
their requirements accordingly until a definite pro- 
gram is agreed upon. Hence, usually one of the first 
steps necessary in order to get some kind of crude plan- 
ning going is to get the line officers immediately con- 
cerned together at regular and frequent intervals in a 
planning meeting, and to have them therein determine 
departmental delivery dates of the shop orders. 

Such a planning meeting has not only to lay out ap- 
proximate departmental and final delivery dates for 



EECOEDS — PLANNING AND DESPATCHING 91 

every order, but also to revise the program from time 
to time and to enforce it. In order that it may ac- 
complish these purposes, some kind of systematic aid 
to the memories of the members of the committee must 
be installed. In the probably chaotic state of things in 
which this much of an improvement in the planning is 
started, some form of tickler file is very well adapted 
to the purpose. Suppose that the meeting works out 
the program for the supposed order as follows: 

Final delivery Sept. 30 

Assembly days 3 

Deliver parts to Department 3 Sept. 27 

To make part B days 5 

Sept. 22 

Sunday, Sept. 24th day 1 

Department 1 to start B Sept. 21 

To make part C days 8 

Sept. 19 

Sunday, Sept. 24th day 1 

Department 2 to start C Sept. 18 

To make part A days 12 

Sept. 15 

Sundays, Sept. 17th and 24th days 2 

Department 1 to start A Sept. 13 



92 APPLYING EFFICIENCY PRINCIPLES 

All that is necessary to get the tickler file going- 
is for the clerk of the planning meeting to write the 
information as above shown on any convenient card, or 
on the back of a copy of the job order, and file it under 
an appropriate date. The probable lack of adaptation 
of conditions, of standards, of despatching, and of effi- 
ciency reward is likely to make it necessary at this 
stage to revise any such tentative program a good 
many times before the work is complete. 

For the same reason, it is well to bring the program 
up for preliminary attention and, if necessary, for re- 
vision somewhat before the date planned for the oc- 
currence of any event. Supposing that the program 
is made out on September 1, it would probably be well 
to file it first under date of September 7. When the 
planning meeting on that date goes over the tickler 
file for the day, this card will come to its attention. 
It would then be in order for the foreman of Depart- 
ment 1 to report whether he expected to be able to 
start part A as planned, and, if not, to ask for what- 
ever revision of the program might be necessary. 

Supposing that he reported that he expected to be 
able to start on time, the card might then go back 
into the tickler file for September 12, and would then 
come up to remind the foreman to start part A on the 
following day. It might then go into the tickler file 
under September 15. When it came up on that date, 
it would call for a report of progress on part A and an 
inquiry as to the prospects for starting part C accord- 
ing to program, on the eighteenth. 

92. Planning is the exercise of foresight, including 
the continuous revision of distant foresight by later, 
closer, and clearer vision. Planning needs to be done 
and done again at every moment ; but to make sure of 



EECOEDS PLANNING AND DESPATCHING 93 

its being done at all, there should be certain times 
when, as a matter of routine, work is planned as far 
ahead as practicable foresight will allow. It is a mere 
superstition that putting into a plant any particular 
set of ruled and printed forms can effect any economy ; 
but to make sure of having plans which are at once 
comprehensible to all concerned and easily expressed 
by those responsible for them, every concern should 
state its routine plans in some standard ruled and 
printed form designed for its own needs. 

93. All that can be claimed for the crude planning 
thus far outlined is that — 

It increases the probability of delivering the finished 
article on the desired date; 

It causes the manufacturing departments to lay out 
their work so as to meet the needs of the assembly de- 
partment ; 

It causes the work to be done in the order in which 
it is needed, instead of solely as it may be locally con- 
venient to the men and machines concerned. 

Nevertheless, even these may be valuable gains over 
the previous state of affairs. 

94. It is to be noted that the planning committee's 
program fulfils the requirements of an order, as stated 
in the chapter on Organization, in that it leaves the 
foremen discretion corresponding to the general lack 
of adaptation of conditions in their departments, and 
to that discretion it sets limits within which it requires 
them to work. 

95. In starting Planning, it is not usually possible to 
take up orders which are already in the plant. It will 
probably be necessary to take up only new ones as they 
are issued, and to allow those already in the shop to 
work themselves out by former methods. 



94 



APPLYING EFFICIENCY PEINCIPLES 



















a 
& 

o 
3 


a 




s 


1 

CO 


1 


















O 


•c 

H 

o 


p 


s 


1 




































■* 


lO 


lO 


>« 


lO 




1 


6 


6 


H . 


^ 


« 


a 


















d 










a 
o 

•*3 


13 


1 












a 


-2 


!:£ 




S3 












2 


o 












d 


6 


'S 


a 

'B 


a 


2 


H 

H 

^ 


i 




01 

a 
O 










'a 
en 


03 




C3 


^ 
















M 


Tfl 


in 


<o 


t^ 


00 












T3 
a) 


•d 


al 


T)< 


■<1< 


•* 


rf 


•* 


•* 






















"3 


o-g 


oS 


C) 






















B-a 


as 


_« 








lU 








o 




M S 


hS 


PS 


hS 


"aJ 


g 


;§• 


-s 


3 


s 






1 




'- ' 1 




00 


02 


O 


CQ 


OS 
C<) 


















•d 
















CO 


CO 


CO 


•^ 


'I' 


Ttl 






u 
































M 
































































£ 
















'a 

i 


-4^ 

> 

s 


•a 

O 

M 

CO 
CO 


5 

1 

CO 


1 

CO 


1 

CO 

CO 






o 












6 

1 
















O 




1 
1 


^ 

£ 
cu 


■g 

a 


1 






e3 
















tn 


o 


t^ 


00 


o> 


o 




















(N 


IN 


<N 


N 


(M 


CO 






^« 
































2 




























•c 

O 


1 

a 


3 

O" 




1 


1 






















OS 


o 


_l 


N 


M 


^ 






d 


















N 


(M 


(M 


<N 


N 


















s 






























...1 


















<a 


s 


a 


a 
1 


a 


5 




















2 


•^ 




(O 


t^ 


00 






3 




























M 




CC 












•g 
















.5 




b 












a 




















o 












o 
















m 






0< 


:3 








O 
















6 


6 


Q 


■q 


Q 


^ 


d 




















r>. 


00 


o 


o 


^ 


IN 































»-( 


'"' 














K 
































■< 
























_2 








o 
























XI 




■€ 




8 


1 






n 












1 
< 


a; 
a 


a 

0> 


w 


"3 


s 






1 




"3 

Q 


r» 












<! 

CO 


3 
'J' 


s 
m 

U5 


3 

n 

to 












,C 


b 





















KECOEDS — PLANNING AND DESPATCHING 95 

96. In order to lielp the foremen to fulfil the deliv- 
ery dates required by the program, the rudiments of 
Despatching ought to be got under way in their de- 
partments as soon as possible. There is a form of 
Eecord which is so useful in this connection, which 
serves so many other purposes as well, and at the same 
time so economizes clerical work, that it ought to be ex- 
plained at this point. 

The problem, in connection with every operation in 
the shop, is to get in one job of clerical work an im- 
mediate, adequate and reliable record of every item 
of information that is wanted, and to furnish every 
one needing records of that operation with the infor- 
mation that he needs. The first question then is, Who 
needs information about the operation 1 The next, with 
reference to each of these, What information does he 
need? The answer to the second question assembles a 
statement of all the items which it is necessary to re- 
cord. By recording the facts as to all of these on one 
form we get them all in one job of clerical work. The 
number of different persons who need the information 
determines the number of copies that must be made of 
the record ; and by having these copies padded together 
and by placing carbon paper between the sheets, the 
clerk makes all of them at one writing. Three good 
legible copies may be easily made in this way and are 
usually enough, but five can be made by having the 
records on carbon-backed paper instead of inserting 
carbon sheets. 

To make the thing clearer, I illustrate by an exam- 
ple. (See Figure 2.) 

Ordinarily the persons who need records direct from 
operations in the shop are the paymaster, the cost ac- 
countant, and the planner. 



96 



APPLYING EFFICIE]SrCY PRINCIPLES 



We may conveniently arrange in tabular form the 
information wanted by each of these, as shown by 
Figure 2. 



TABLE 1. 



DATA WANTED FROM LABOR REQUISITION, OK SERVICE CARD 



By Paymaster 

Date 

Department 

Employee 

Whether job is started, 
continued, or finished 



The standard time of 
the operation 



Time elapsed on the 
work 



Wage per man-hour (W) 



Special information in 
particular cases, in- 
cluded under ' ' Details ' ' 



By Cost Accountant 

Date 
Department 

Whether job is started, 
continued, or finished 

The order number 
The operation 

The standard time of 
the operation 



Time elapsed on the 
work 

Equipment rate, or hour- 
ly cost of running the 
machine used (E) ^ 

Wage per man-hour (W) ^ 
The hourly burden (B) ^ 
Man-hours of labor on 
the job (H) 2 

Special information in 
particular cases, included 
under "Details" 



By Planner 

Date 

Department 
Employee ^ 

Whether job is started* 
continued, or finished 
The machine used 
The schedule number ' 
The order number 
The operation 

The standard time of 
the operation 
When work began 
("Time Started") 
When work ended 
("Time Finished") * 

Time elapsed on the 
work 



Special information in 
particular cases, in- 
cluded under "Details" 



In this case all the operations performed in the de- 
partment are listed at the bottom of the card and num- 
bered ; and ' ' Operation No. ' ' in the fourth line of the 
card is filled in by number only. This is convenient 

1 S { (W -H B 4- E) X (Time elapsed)} = Total cost. In the case of a 
gang operation this has to be summed up from all the cards of the gang, 
or the despatcher has to summarize this on the card of the gang boss. 

* As to (H) see Article 103. 

' An example of a schedule is given in Table 3, Article 108. 



RECOEDS — PLANNING AND DESPATCHING 



97 



in the use of the card ; but if any considerable amount 
of time will be required to prepare the numbered list 
of operations, it will be better to get the cards into use 
without it, and to denote the operations by the names 
by which they are commonly known in the shop. How- 
ever, operations should be given some definite designa- 
tion as soon as that can be done without delaying more 
important work. 

Wage per man-hour multiplied by "Time Elapsed" 
gives the paymaster and the cost accountant the direct 
wages on the job; ''Standard" divided by ''Time 
Elapsed" gives them the efficiency. If a system of 
bonus payment dependent on the efficiency is used, the 
latter by reference to a bonus table gives them the per 
cent of bonus. 

The direct wages multiplied by the per cent of bonus 
gives the bonus due on the job. 

The information wanted will, of course, vary accord- 
ing to local conditions. Other information commonly 
wanted from the service cards is given in Table 2. 

TABLE 2. 

OTHER DATA COMMONLY WANTED FROM LABOR REQUISITIONS OR SERVICE 

CARDS 



By Paymaster J 



By Cost Accountant By Planner 



The article or part in 
work 

Number of pieces com- 
pleted: — 

Brought forward from 

previous cards; 

On this card; 

Total 

Other workers employed Other workers employed 
simultaneously in case simultaneously in case 
of gang operations . of gang operations 



The article or part in 
work 

Amount ordered 
Number of pieces com- 
pleted: — • 

Brought forward from 

previous cards; 

On this card; 

Total 
Responsible inspector 
Other workers employed 
simultaneously in case 
of gang operations 



98 APPLYING EFFICIENCY PEINCIPLES 

Tables 1 and 2 are not offered as exhaustive in all 
cases. The proper procedure is to list the information 
wanted, as is done in those tables, being careful to 
call for only needed information, and then to design a 
form to contain it. 

Supposing, as is commonly the case, that only the 
Paymaster, the Cost Accountant, and the Planner need 
reports; three copies are enough. Three sets of file 
records originate from the three copies of these cards ; 
and for the sake of distinction between the files and of 
uniformity in each of them, it is convenient to make 
each of the three copies on paper of a different color. 
They are then padded in sets, into which the clerk in- 
serts the carbon papers for making all three copies at 
one writing. In the regular use of the cards, one copy 
of each will go to a workman as his order to do the 
job, and will be returned by him as his report that he 
has ceased work on it. The card for this purpose needs 
to be rather heavy, and its thickness puts it at the bot- 
tom of each set in padding, in order that carbon cop- 
ies may not have to be made through it. 

97. In order that a foreman may be able to plan and 
despatch the work within his department, he should, 
unless his department is very small, be given the as- 
sistance of a clerk, known as a ''despatcher," for that 
special purpose. As explained in Article 81, the wages 
of this derk are a good paying investment, because 
they come back many times over in increased effi- 
ciency of the department. 

98. It facilitates the work of the foreman and of 
the despatcher very much to provide them with a 
board, called the "despatch board," on which to dis- 
tribute the jobs to the different workers of the depart- 
ment. This board has been described and illustrated 



EECORDS — PLANNING AND DESPATCHING 99 

SO many times that I shall say only that it contains 
two pockets or receptacles for every worker, one of 
which I shall call the ''stand-by" pocket and the other 
the ** reserve" pocket. 

The despatcher, with desk and despatch board, 
should be located in some place easily accessible to the 
workers. One despatcher can serve about one hundred 
workers, and may despatch for several foremen. 

There should always be a card in the stand-by pocket 
of the board for the next job that the worker is to do. 

When a man stops work on a job, he should deposit 
the card for it on the despatcher 's desk as his notice 
to the latter that he has ceased work on it, and should 
take his card for the next job from the stand-by pocket. 

This involves the worker's walking to and from the 
despatch board every time he changes his work. When 
planning is going right, his jobs ought to be assigned 
to him in long runs of the same kind of work, as it in- 
creases his efficiency to have them that way; and, 
when this is accomplished, the amount of time that 
he spends going to and from the despatch board is 
negligible. Also, it is a mistake to suppose that it in- 
creases a man's efficiency to root him to one spot for 
hours at a time. He needs to stir about once in a while, 
to stretch his legs, and to relieve the monotony, and 
his efficiency is increased by so doing. This is dis- 
cussed further in Articles 206, 208, and 216. 

99. It is usually a good plan to begin departmental 
despatching by setting up the despatch board and hav- 
ing the men report to the despatcher and change their 
cards with every change of jobs. The despatcher 
should record these changes on the cards from the 
men's reports, while at first allowing the workers to 
receive their orders just as they have done previously 



100 APPLYING EFFICIENCY PRINCIPLES 

to this time. The purpose of this is to accustom the 
men to the use of the board, and to teach the despatcher 
to keep the records. This should be accomplished be- 
fore anything is made to depend upon the use of the 
cards. 

Where previously the work has been very poorly 
planned, this may mean at first that the men have to 
change their cards very often, which is, of course, a 
nuisance; but this is a condition which needs to exist 
for only a short time, during which it can be tolerated 
for the sake of results to follow. 

100. As soon as the use of the board has been 
learned, we can start despatching the work in the de- 
partment, so as to fulfil the departmental delivery 
dates set at the planning meeting. The foreman should 
take his order for a job and analyze it into the sepa- 
rate operations required in his department. As soon 
as possible, he should make a tentative assignment of 
every operation to a worker or gang, and to a machine. 

The despatcher should make out a set of cards for 
every operation, filling in "Service Card No.," ''Dept. 
No.," "Order No.," and "Operation No.," as matters 
of routine. If the job is to be put into work for the 
first time, the despatcher should strike out "Cont." 
(Continued). If work has been started on the job, but 
has been interrupted, he should strike out ' ' Start ' ' on 
the card which orders work to be continued. This is 
for the information of the Planning Department. He 
should then file the set of cards, fastened together by 
a binding clip, in a file of unassigned work ahead ; and 
as soon as the foreman has decided to whom to give the 
work, the despatcher should transfer the set of cards 
to the reserve pocket of the man to whom the foreman 
has assigned the work. 



EECOKDS — PLANNING AND DESPATCHING 101 

As soon as possible after a workman has taken his 
card from the stand-by pocket, thus signifying that the 
job is in work, the despatcher should obtain from the 
foreman his assignment for the next job, and should 
place the workman's card for it in the stand-by pocket. 
He should then fill in ''Employee" and ''Operator 
No." According to the circumstances, he may either 
fill in ' ' Machine No. ' ' then or wait until the workman 
draws the card from the stand-by pocket. 

The despatch board thus handled becomes a picture 
of conditions in the department. As such the fore- 
man should take a keen interest in it and should often 
inspect it. 

When the foreman is assigning the operations for 
any order, the cards in the reserve pockets show how 
much work is ahead of every man, gang, and machine ; 
and the foreman will naturally assign the new jobs to 
those that have the least ahead of them. 

Or, if two men can do the same operation and their 
reserve pockets show that one has much more work 
ahead than the other, the foreman can transfer some 
work from the overloaded to the underloaded worker. 

The foreman ought to arrange the cards for as many 
as possible of the jobs ahead in the reserve pockets in 
the order in which they are wanted. If two or more 
men do the same operation, and the reserve cards im- 
mediately ahead of one show jobs that are not wanted 
soon, the reserve pockets of the others should be ex- 
amined to see whether any jobs that are wanted soon 
are in them with several other jobs ahead of them. 
If so, they should be transferred to the reserve pocket 
of the first worker, and placed ahead of the jobs in it 
that can wait. 

If cards are arranged in the reserve pockets in the 



102 APPLYING EFFICIENCY PEINCIPLES 

order in whicli the jobs are wanted, when a man takes 
his card from the stand-by pocket the despatcher will 
at once transfer the workman's card for the next job 
from the reserve pocket to the stand-by pocket. 

When the workman's card is transferred from the 
reserve to the stand-by pocket, if there are no cards 
left ahead in the reserve pocket, the despatcher should 
at once notify the foreman to that effect in order that 
he may look out for work for the man who is in danger 
of running out. 

The cards ahead in the reserve pockets also show 
for what jobs soon to go into work set-ups have to be 
made, what tools have to be got in order for them, what 
materials have to be moved, and to what machines; 
and in general they give warning of all preparations 
that have to be made in order to keep the department 
running smoothly. 

It is evident that the despatch board, if used in this 
way, enables a foreman to watch his department much 
more closely than he could without it ; and that it can 
therefore effect valuable results, even if conditions are 
very far from being adapted to the work, and even if 
the foreman's guess is the best information available 
as to how long it will take to do any job. 

101. The above methods of starting crude planning 
and despatching should not be considered as an iron- 
clad procedure, but should be varied as necessary to 
get the best results. 

For example, the purpose of the planning meeting 
is to determine and enforce departmental and final de- 
livery dates. If this can be better done by some other 
means, they should be used in preference. The X. Y. 
Z. Company had established a central planning office 
which determined these dates and notified the fore- 



BECOKDS — PLANNING AND DESPATCHING 103 

man, with the job orders, of the dates when they were 
expected to deliver the work from their departments. 
The success of this effort was the more remarkable be- 
cause, up to the time when further improvement of 
planning was undertaken, the clerks were determining 
delivery dates solely from the need for the article, 
without considering the capacity of the departments. 
Even this had accomplished enough, so that the next 
step necessary was the introduction of departmental 
despatching. As soon as that was going, the planning 
clerks were taught to estimate in advance the capacity 
of the departments, and to set delivery dates from an 
estimate of time required in the shop, as well as from 
an estimate of the date when the product would be 
wanted. 

If a foreman has a very large department, or one in 
which the technique of the work requires a great deal 
of his attention, it may be necessary to give him a 
skilled departmental planner who can relieve him alto- 
gether of the details of departmental planning and des- 
patching. 

On the other hand, a foreman may be able to handle 
a small department without any assistance. If the de- 
partment is very small, or the foreman has a very good 
memory, he may be able to plan and despatch so well 
in his head that any formal system would be mere red 
tape, except in so far as it is necessary in order to 
provide the office with necessary records. 

A similar case occurs where the department carries 
on a continuous process on only a small variety of 
articles, in which case planning may be done once for 
all, and a definite routine established by which the work 
flows automatically in a continuous stream. 

In some cases it may be advisable, instead of hav- 



104 APPLYING EFFICIEIsrCY PEINCIPLES 

ing a central despatch board, to have pockets for the 
cards located at or near the men's work places, espe- 
cially if such receptacles already exist and the fore- 
man has been accustomed to place orders for the men 
in them. In the latter case, the use of the separate 
pockets at the work places involves less of a change 
from previous methods and, therefore, the men more 
readily adopt it. This method has the disadvantages, 
however, of taking more of the despatcher's time, 
thereby reducing the number of men that he can serve, 
and of making it more difficult for the foreman to get 
a bird's-eye view of the condition of his department, 
unless a duplicate board is maintained for that pur- 
pose, in which case the chances of error are increased 
and further demands are made on the time of the 
despatcher to maintain the duplicate despatching. 

The despatch board comes as near as anything can 
to being a standard device ; but under special circum- 
stances I have done departmental planning and des- 
patching by means of tickler files. Always the import- 
ant thing is to apply the principle of planning and 
despatching. Devices and methods are secondary. 

If the work has been very poorly planned before, so 
that the workers change their jobs very often, it may 
be necessary for the foreman first to learn to use the 
board to plan his work, meanwhile continuing to give 
his orders by previous methods, and not to have 
the workers begin to use the board until the foreman 
has learned to plan his work so well that they will 
have to change their cards with only reasonable fre- 
quency. 

Under special circumstances it may be necessary, in- 
stead of taking a whole department onto the despatch 
board at once, to take it on gradually — a gang, or a 



EECOEDS — PLANNING AND DESPATCHING 105 

few workmen, or even only one workman at a time. 
In such a case, the extent to which betterment should 
go with each lot before the next is taken on is entirely a 
matter of expediency and special judgment. 

Sometimes it may be necessary to take the depart- 
mental planning and despatching first, at least for 
some departments, before starting central planning. 

102. When a man takes his card from the stand-by 
pocket, the despatcher should fill in the date and the 
hour, as ''Time Started," in hours and tenths of hours 
of working time from the beginning of work for the 
day or the shift. A clock with its face reading in 
hours and tenths of hours from beginning of work is 
easily and cheaply provided to facilitate this and to 
decrease the chances of error. This clock also has been 
described so many times as not to need further ex- 
planation here. 

As soon as the standard time has been determined 
for the job, and efficiency reward has been introduced, 
the despatcher should fill in ''Standard" on the card 
before it goes to the worker. This enables the latter to 
see what pace he has to attain in order to earn the re- 
ward. It also enables him to see that his making a 
good efficiency does not lead to cutting down the stand- 
ard time. See also Article 311. 

When a worker returns his card, the despatcher 
should fill in "Time Finished," subtract "Time 
Started," and put down the difference as "Time 
Elapsed." 

If the job is not finished, the despatcher should 
strike out "Fin.," thus notifying the Planning De- 
partment that work remains to be done on it. 

At the close of ever^ working day or shift, the des- 
patcher should make out continuation cards for the 



106 APPLYING EFFICIENCY PEINCIPLES 

jobs which are not finished, and should fill the stand- 
by pockets of the despatch board in readiness for the 
next day or shift. 

In order that the Planning Department may know 
where it stands, the despatcher, as promptly as pos- 
sible after the close of the work of every day or shift, 
should turn in to the Central Planning Department all 
his cards that were in work on the previous day or 
shift. Before doing so he should reassemble every 
worker's card with the other cards of the set, and 
should clip the three or more cards together again with 
the inserted carbon papers. 

' ' Sched. No. ' ' will probably not be filled in when the 
cards are first used, because there will usually not yet 
be any schedules. After schedules have been produced, 
this blank should be filled in by the Planning Depart- 
ment which should, by that time, have taken charge of 
making out the entries, ''Dept. No.," "Sched. No.," 
''Order No.," and "Operation No.," on all service 
cards and transmitting them to the shop department. 

Special information under "Details" should, of 
course, be filled in as circumstances may require. 

Reference to Table 1 (page 96) shows that ulti- 
mately, as the despatcher makes his last entries on 
every set of cards, they contain all the information 
needed by the Paymaster, the Cost Accountant, and 
the Planning Department, except E, W, and B. These 
last are permanent information, and should be kept 
on file by the Planning Department. 

103. The Planning Department should fill out E, W, 
and B. H, the man-hours on the job, is the sum of 
"Time Elapsed" from the cards of all the workers em- 
ployed on it. The Planning Department should 
promptly complete the service cards and then forward 



RECORDS — PLANNING AND DESPATCHING 107 

the Paymaster's and the Cost Accountant's copies to 
them. After those officers have used their copies for 
making out the pay and bonus rolls, and for costing, 
respectively, they should place them on file. The Pay- 
master's copy should be filed by workers. In this way 
there is built up in the pay office a complete record of 
every one. The usefulness of this was stated in Ar- 
ticle 43. The Cost Accountant's copy should be filed, 
according to whatever designation will be most valu- 
able in the system of cost-keeping employed, as a jjer- 
manent detail record of costs. 

It is common to file the Cost Accountant's copy by 
order number, but there are many cases in which some 
other classification is more valuable. As Coburn says : 

In continuous process plants, like cotton mills, process costs 
are more valuable than total costs by order numbers ; in fact, 
the latter are of little or no value in watching cost of pro- 
duction. The job of the spinning room is to spin enough 
good yarn at minimum cost, that of the weave room to weave 
it cheaply. So that total costs are really of little use in the 
mill, once the patterns and construction for the season have 
been determined. In a brake-shoe foundry, the superintend- 
ent wants his melting and molding costs; the costs of the 
orders take care of themselves if the process costs are 
watched. 

The same copy of the service card that has been 
used by the worker in the shop should be retained by 
the planning department. This copy is usually the 
least legible of the three, and should therefore go to 
the department which, from familiarity with its con- 
tents, can read it most easily. It informs the plan- 
ning department of progress in the achievement of 
its plans, and enables it to make such revisions of 
them as the facts require. 



108 APPLYING EFFICIENCY PRINCIPLES 

After this has been done this copy of the card is of 
no further interest to the planning department, but it 
is a good plan to keep it in some permanent file from 
which needed information can be readily obtained. For 
example, in the distribution of burden and the deter- 
mination of hourly rates of equipment, and in revising 
plant lay-outs to get the most efficient routing, informa- 
tion as to the exact amount of use of every piece of 
equipment is needed. This card may therefore be filed 
by machine numbers, unless some better use for it is 
apparent. 

104. In spite of all that can be done toward the 
Adaptation of Conditions, interruptions and delays 
will sometimes occur. The standard times set for work 
should include a reasonable allowance for such minor 
interruptions of very short duration as can not be 
avoided. Beyond that it is seldom possible to pay any 
attention to them. 

Occasionally, a serious delay will occur from causes 
which can not be foreseen; for example, in one plant 
in which I was working, a sudden cloudburst flooded 
the basement, making it temporarily uninhabitable. 

When any serious interruption occurs, the workers 
who are delayed by it should receive a special card. It 
is convenient to make this card of similar form to the 
service card, but of different color to distinguish it, 
and with the title, ''Exception Card" or ''Allowance 
Card," instead of "Service Card." 

It should clearly state the nature of the interruption 
and its cause, if known. The exception card should 
preferably state the time of beginning and end of the 
interruption and the time elapsed, though where an 
excessive amount of clerical labor would be required 
to record these times, it may simply state the time 



EECOEDS — PLANNING AND DESPATCHING 109 

elapsed. This is discussed further in Articles 152 and 
299. 

The three copies of the exception card should follow 
the same routing as the corresponding copies of the 
service card. The paymaster's copy should be filed by 
workers, in order that that file may contain a com- 
plete record of every worker's time. The same prin- 
ciple applies to the planning department's file by ma- 
chine numbers. In the Cost Department the expenses 
due to such delays should be figured separately as an 
item of burden not chargeable to individual orders, 
articles, parts, or operations. This department should 
therefore file its exception cards by themselves. This 
file has a valuable use which is discussed in Article 
152. 

However, in some cases it is not practicable to have 
the direct workers change their service cards at the 
beginning and end of the interruption. For example, 
suppose that the power goes off for six minutes; the 
loss of this time might seriously lower a worker's effi- 
ciency, but it would only lower all efficiencies still more 
to have every worker in the shop change his card at the 
beginning and end of the interruption. Instead the 
despatcher should make out, for every worker on stand- 
ard time and bonus, an exception card which should 
give the duration of the interruption, if possible its 
cause (in this case, ''Power Off") and preferably the 
time when it began and when it ended. 

In all calculations of actual time from the service 
cards, the exception cards for the date should also be 
seen. If any cases are found where the service cards 
have not been changed before and after the interrup- 
tion, the time covered by the exception cards should 
be subtracted from the actual time shown by the ser- 



110 APPLYING EFFICIENCY PEINCIPLES 

vice cards for such cases, thus resulting in a correct 
net charge for standard time in every case. 

105. The service card or equivalent record, made at 
the time and place of performance of the actual work, 
has the very great importance of being the foundation 
of almost all the other records of the business. It is 
not uncommon to find an elaborate office system based 
on shop records that are questionable, to say the least. 
Evidently, attention must be paid first to getting the 
fundamental records right. 

106. Important members of the class of fundamental 
records are those of temperature, pressure, and other 
physical quantities, whose regulation may be impor- 
tant to any manufacturing process. The use of auto- 
matic recording instruments in such cases enables the 
workers to act with knowledge of what they are about, 
instead of by guess, and is valuable higher up for the 
location of responsibility and the determination of 
causes of failures. 

107. In order that planning and despatching may ad- 
vance beyond the stage above indicated, it is necessary 
that betterment should be done in other directions and 
by the application of other principles. 

It is evident that in order to obtain a coincidence of 
events as to time, it must be known how much time will 
be required to produce the events. Time studies are 
the ordinary means to obtain this knowledge; but it 
must be remembered that the point is to obtain the 
knowledge, and if some other means will do that bet- 
ter than a time study, the other means is the one to 
be used. 

108. Also the events themselves must be analyzed 
into their elements, which in this case are the shop 
operations. The elements of time and events must 



TABLE 3. SCHEDULE FOB PLANNING DEPARTMENT 





SCHEDULE 1 




OPERATION 


EQUIPMENT 


REMARKS 


PART 






{In Hours per 100 Articles of Finished Product 
'^ Unless otherwise noted.) 




IN ORDER OF PREFERENCE 


MAKE SLIDES TO STOCK 


Pesignation Number of Finished and Assembled Articles 
671 672 675 €74 






Linderman , No. I 


67i 


■ SlJde Cores 
















67i 20iLx22' 672-16^' Lx 22' 


.61 


J. 22 












674 L ~ Length fed through Linderman 
















£ very piece thus g/ued up mo}(es 
















2 Slide Cores 












Rippinq 


Rip Soty No. 83 or 




Pip 20i 7^22' nexf above into two lO'r. 22 












, 


■ " 98 




■ lek'xZZ' - ■■ - - 8-K22' 












CufNnq to Lenqfh 


Rip 6aw No. 89 or 




Standard time is for all three operations 


.57 


l.li 


1.13 


1.13 






- S8 




at one handling Flan accordingly 
Either sow may be used as well 
as the other 












Cuttinq 


Rip Saw tia dd or 
















n 


















All stiles 22' long. Stiles from stock 


Siide Stiles and Cores as 
^ filed cores 












Sfi/ing 


Linderman, No. J 


.3/ 


.ez 


.62 


62 


















Headinq 


Undermon, No. 1 


67 i 1 Heads 671- Head 10 i long 

675 \ llh' 

674 ] tong 

Heads come direcNt^ From 5tocJ( 


Slide heads and sti led cores 
■ as complete slide cores 


.51 


.62 


.62 


.62 














































Pianmq both sides 


3ur facer. Note 


Complete Cores go to Veneer room 


73 


.26 


.26 


.26 




Sandinq 


bonder. No. 5 


.06 


.13 


.13 


.13 
































Cutting oft 


Cross cut saw. No 248 




■dlide Veneers 














Anu cross cut saw 












Rlf^ina 


Rip sow. Na 201 


.81 


/.IS 


1.61 


l.il 






Anq npsaw 












Dru'/nq 


Veneer heater^No.lOZ 












Jo'imnq 


Veneer Joiner No 203 












Lowna UP 














'bpmq 


Veneer Taper No. 204 


.22 


.4S 


.4S 






Gtuing Joints 


Veneer joint qluer. No. 20S 


./7 


.2S 


.34 


.34 




, 














Rqc/(/nq up fbr f^ess 




Assemblu of Cores and veneers. Standard 
time includes rocking up to dry but not 
drying. 




.45 




.3 


.9 


















ffocAinQ UP to dm 














Takina out'tauly- 




Standard time is for drying only 
Both operations to be done atone 


< ^4 Hours of elapsed time regard less of Si 

.33? .>9? 1 .79? 


re- of lot >■ 

.75? 




Jo'mina 


Jpiner tia S7 or 
No ei 


Either joi/Tcr may be used as well 
as the other 




.SS 


.64 
l.ll 


.64 
l.ll 


.64 
l.ll 






Rip saw. No. 89 or 
Ripsaw. No 98 


Either saw may be used as well as the 
other 




.3 


.6 


.6 


!o 




D.E.Cuto^ 


Tenon tiachine No. 58 
D. £. Sow. No. 60 




Complete slide cores • 
■ and veneers as slides 


.21 .43 
.21 .44 


.43 
.44 


.41 

.44 




('^•Sondinq 


Sander No. 9 


Standard time is for born operarions or one \ 
handling; plan accordingly J 
Slides go to 2"° Floor 




.21 


.14 


.S4 


.S4 




















Matfeson poiistier Na 30J 
Polisher 307 














: 


^hopinq 


•• 548 1 

S/iaper. in 1 
- 71 \ 


Either sandermau be used as well 
as the other 

Slides return to /^'" Floor 
Putting hand grip orj slides 
Slides go to Cabinet Shop 




■41 


.37 


.12 


.82 



RECORDS — PLANNING AND DESPATCHING 111 

then be synthesized into the Schedule, of which an ex- 
ample is shown in Table 3. Obviously the exact form 
of the schedule in any given case depends upon the 
work in hand. 

The third column of Table 3, * 'Remarks, '' is for such 
miscellaneous information useful to the planner as can 
conveniently be embodied in the schedule. 

Everything that the planner can know about the 
operations, the product, the materials, the tools, the 
men, and the shop is useful to him. Very much of this 
information, much more than can be embodied in the 
schedule, is worth recording in permanent and con- 
venient form. The forms in which, and the origins 
from which, this information reaches the planner are 
so various that it is hopeless to try to standardize its 
form. It is a good plan, therefore, to file the schedules 
in large envelopes; and as drawings and other infor- 
mation valuable to the planning oflBce are acquired, to 
file them in the envelope containing the schedule of the 
part or article to which they chiefly refer. If any such 
piece of information refers to several parts or articles 
it may be most efficient, according to circumstances, 
either to have copies of it made to file with all their 
schedules, or else to file it with the schedule to which 
it most applies, and to file cross references with the 
other schedules affected. This collection of schedules 
and of information pertaining to them is called the 
''Analysis File." 

The time studies by which were determined the 
standard times shown at the right of the schedule 
ought to be kept on file, but any schedule of the form 
shown in Table 3 would be swamped by filing with it all 
the time studies involved. It is usually better to keep 
the time studies in a separate file, so arranged and 



112 APPLYING EFFICIENCY PKINCIPLES 

classified that the time study relating to any operation 
on any part can be readily found when wanted. 

109. At the time the schedule shown in Table 3 was 
made out, the work of symbolizing had not advanced 
very far. The schedule is shown in this form, be- 
cause it ought to be got into use as an aid to planning 
without waiting for the development of a complete 
symbol system. Of course, operations, parts, partial 
and full assemblies, and machines ought to be denoted 
by definite symbols as soon as they can be worked out 
without taking time from other things of more impor- 
tance. A sufficient reason for this is that the names 
which grow up naturally for operations and parts are 
not uniform even in different parts of the same plant. 
Consequently, orders given in terms of those names 
have not such clearly defined meaning as is to be de- 
sired. 

110. Under ' * Slides, ' ' operation ' ' Taking out cauls, ' ' 
the standard times are marked "doubtful." This 
means that the times given may be used in planning, 
but must not be used as a basis for the payment of 
efficiency reward until they have been confirmed. Such 
jobs will be paid straight time rates only, until stand- 
ard time has been reliably determined. 

Under "Slide Veneers," operation "Cutting Off," 
no standard time is given, as it is represented as not 
yet determined. If a schedule is otherwise ready to go 
into use in planning, a few gaps in the standard time 
column should not be allowed to delay its use. Such 
gaps may be filled in, when occasion arises, by the fore- 
man 's guess at the time required, if no better informa- 
tion is available, rather than to allow a long delay in 
getting the benefit of the parts of the schedule already 
determined. 



EECOEDS — PLANNING AND DESPATCHING 113 

111. In planning from schedules like that of Table 
3, allowance must be made for the actual efficiency and 
for the time that the material will lie idle between 
operations. The time studies necessary to determine 
the standard times ought also to give average efficiency 
as a by-product. Dividing the standard time by this 
will give the time which must be estimated as actually 
to be used. Average idle time between operations can 
be determined by a few time studies for that special 
purpose. It should be one of the aims of planning to 
reduce the idle time as much as possible. 

On this point Coburn says : '^ 

In a certain cotton mill, the value of work in progress as 
disclosed by recent inventory was $160,000, approximately. 
The inventory was made very carefully, let us say, so that 
it was fairly exact and showed the department totals. Now 
in this mill that figure could be reduced about fifty per cent 
and still keep a safe margin ahead of each process; it would 
take quite a long time and much close application and hard 
work, but, if this effort will release $75,000 in real money, it 
is worth while. . . . The ideal state of work in progress 
account would be attained if there were no other material 
in the plant than that which is actually being worked on. 
Generally speaking, this ideal is not practicable. But the 
nearer it is approached the better; and the practicable limit 
is attainable only by keeping the work constantly moving 
through the plant. ... If the progress of work be scheduled 
in advance, and if the actual progress be regularly reported, 
then statistics are obtainable from the schedules which will 
show where the work is being held up — obviously the point 
of attack. 

Of course, as betterment proceeds, the allowances 
both for actual efficiency and for idle time will have to 
be adjusted to agree with continually improving per- 
formance. 



Chapteb VIII 
EECORDS— PLANNING AND DESPATCHING 

FuETHER Development 

112. 

OBVIOUSLY, when schedules enough have been de- 
termined to cover all, or nearly aU, of the work 
of a department, planning its work is no longer a mat- 
ter requiring the special knowledge contained only in 
the memories of superintendents and foremen, and 
planning its delivery dates can be turned over to the 
staff Planning Department. (See Figure 1, Article 
66.) It is desirable that this should be done as soon 
as possible, in order to relieve the line of the burden of 
the planning meeting. 

The central planning department may either send to 
the shop department a separate order for every job 
which is to pass through it, such order stating the date 
and the hour, if possible, on which materials, tools, 
etc., will be available in the shop department for the 
performance of the work, and the latest date and the 
hour, if possible, on which the shop department is ex- 
pected to deliver the product ; or it may make out for 
a shop department for every day, and as far in ad- 
vance as possible, a statement of the work required to 
be done in that department on that day. 

114 



RECORDS — ^PLANNING AND DESPATCHING 115 

Of the two methods, the first puts the greater amount 
of work on the departmental planner and the less on 
the central planner, and leaves the former the greater 
discretion ; and the second puts more work on the .cen- 
tral planner and correspondingly relieves the depart- 
mental planner, but ties the latter down to a definite 
daily program. The first method is therefore the more 
elastic and the better suited for use when planning is 
first inaugurated, and when, through unadapted con- 
ditions and lack of standard times, it is impossible to 
use much foresight, so that a great deal has to be left 
to the man who is directly in contact with the work. 
The second method gives the central planning depart- 
ment the closer control, and is the better suited for 
use after planning has been well developed. 

In putting orders into the shop care should be taken 
to load every department approximately to its capac- 
ity. Neglect of this results in failure to keep prom- 
ises of delivery. // work is nominally planned, it also 
brings the whole planning scheme into contempt to 
require impossibilities of the shop departments. 

At first, departmental capacities have to be estimated 
from general knowledge. As conditions become 
adapted and schedules are determined, these capacities 
can be more and more closely approximated, but al- 
ways remain somewhat elastic quantities. This very 
elasticity indicates the possibility of recourse to the 
good engineering principle, ''When in doubt, make 
your error on the safe side." The safe side in this 
case is to put the order into the shop, if it is merely 
doubtful whether it can be filled — that is, unless it is 
certain that it cannot be. The elasticity of capacity 
of the shop departments enables them to take up a 
considerable amount of apparent overloading, and the 



116 APPLYING EFFICIENCY PEINCIPLES 

workers will always produce more if they see plenty 
of work ahead of them. On the other hand, driving 
will not force, and rewards will not induce workers to 
take a rapid pace when there is apparent danger of 
their soon running out of work. 

In order that a planning department may hold a 
foreman responsible for delivery on a certain date, 
theoretically it should see that materials, tools, and 
everything else necessary for the performance of the 
work will be available in the shop on the required start- 
ing date ; but in practice, if we should wait until we got 
everything one hundred per cent correct before start- 
ing an improvement, we should never start any. In 
this particular matter the foreman, in all probability, 
has been accustomed to look out for himself in the 
matter of his tools, materials, etc., and it may be best 
to allow him to continue to do so until the planning de- 
partment can get on its feet in planning work out of 
his department ; but evidently the planning department 
should plan his materials, etc., for him as soon as it 
can. 

If the line is not particularly burdened by the plan- 
ning meetings, it may be well to allow such meetings 
to continue until the planning department can see that 
a department has its materials, tools, etc., when they 
are needed, before undertaking any planning of opera- 
tions. The exact order in which steps are taken must 
vary with the necessities of the case in hand. If ma- 
terials have been selected as the first thing in the 
whole plant on which to work, it would be natural to 
plan the deliveries of materials to departments before 
beginning to plan the work of any department. 

113. In order that the planning department may plan 
as to materials, it must know the amounts on hand and 



KECORDS — PLANNING AND DESPATCHINa 117 

the amount required for the manufacture of any or- 
der. This involves the creation of two sets of records, 
Bills of Material, which should be filed in the Analysis 
File with the schedules to which they apply, and Per- 
petual Inventories, or stock ledgers, of materials. This 
does not mean that these records must be complete for 
the whole plant before the planning department as- 
sumes any control of materials. When efficiency work 
is being concentrated on any department, these rec- 
ords may usually be got out for it, and the planning 
department may take over the work with reference to 
it without waiting for other departments. 

The Bill of Material, as an adjunct of engineering 
drawings, has so long been familiar that probably no 
further discussion of it is necessary, but it may be 
well to explain the perpetual inventories. 

The information needed in the perpetual inventory 
is as follows : 

Articles into whose manufacture the material en- 
ters, as a cross reference to the analysis file for gen- 
eral information not conveniently carried on the in- 
ventory itself; 

In the case of any worked material, cross refer- 
ences to other worked materials, if any, which can 
advantageously be manufactured in combination 
with it (see Article 157) ; 

The location of the material in stores ; 

The nature of the material, as wood, stone, iron, 
liquid, etc.; 

The dimensions of one unit of the material (where 
dimensions are not simple, this should be given by 
reference to a drawing or specification) and perhaps 
also unit weight; 



118 APPLYING EFFICIENCY PBINCIPLES 

Amount and date and number of order of all ma- 
terial ordered ; 
Amount and date of reception, and order number, 

of all material received; 
Amount of all material reserved, and dates on and 

orders for which it is reserved ; 
Amount of all material delivered and date on and 

order to which it is delivered; and 
Amount of material available in stores on any 

given date. 

The usefulness of the perpetual inventory is very 
much increased if it also states maximum and mini- 
mum limits of the stock. 

In order to be adapted to changes without any result- 
ing confusion, the inventory must be in loose leaf or 
in card index form. It is next necessary to design a 
form to contain the desired information, which shall 
also be suitable to the filing arrangements available. 

Fundamentally, the minimum limit of stock is the 
product of the average rate of use of the material and 
of the average time required to obtain a new supply, 
both determined by previous experience. This product 
may be called the theoretical minimum. The result 
must be tested and corrected by general knowledge. 
When the data are insufficient, or for other reasons the 
result is in doubt, it is well to add to the result a safety 
reserve, just as the engineer adds a constant to ra- 
tional formulas for the dimensions of parts subject to 
corrosion. The final result may be called the actual 
minimum, or low limit. 

If the average rate of use of the material and the 
time required to obtain a new supply were constant 
and definitely known, there would be no need of a 
safety reserve. If then a supply equal to the minimum 



RECOEDS — PLANNING AND DESPATCHING 119 

limit were ordered just as that limit was reached, it 
would be received just as the supply was exhausted, 
would just bring the supply on hand up to the mini- 
mum, and it would again be time to order a new sup- 
ply. This condition would be met very simply by 
making the maximum limit equal to the theoretical 
minimum plus the actual minimum, and by ordering 
the difference between maximum and minimum when- 
ever the actual minimum or low limit was reached. 

In the case of worked materials and finished stock, 
the amount to order ought to be determined so as to 
secure manufacturing efficiency; and the maximum 
limit would then be the minimum limit plus the amount 
to order. In the case of these materials, the maximum 
ought to be calculated both ways, and the larger result 
should be used. After the maximum limit has been 
calculated as above, it ought to be tested and corrected 
by general knowledge. 

"We are always looking for automatic devices as sub- 
stitutes for human watchfulness. The methods of 
efficiency can not be safely used in that way. If they 
are regarded as aids to watchfulness and intelligence, 
they are very valuable; but, if they are allowed to 
take the place of brains, they are dangerous. In this 
connection, the stock clerk ought to be told that he 
must never allow any manufacturing process to be de- 
layed by exhaustion of the supply of materials ; to do 
that he must be alert and intelligent ; the limits on the 
stock are intended to help him to accomplish the de- 
sired result, but never to excuse him for failure. 

As a practical result, the maximum limit prevents 
over-stocking, and the minimum limit adds to the safety 
of manufacturing processes against delays due to lack 
of supplies. 



120 APPLYING EFPICIENCY PRINCIPLES 

In the absence of a maximum limit, everyone con- 
nected with manufacture tends to play safe, because 
delay due to lack of materials is pretty sure to call 
down wrath on anyone who can be blamed for it, 
while, without a maximum limit, it is always debatable 
whether there is an overstock or not. 

In spite of the tendency to play safe, some article of 
stores will be reduced occasionally without anyone's 
noticing it, and the result will be exhaustion and de- 
lay of manufacture. If there is a minimum limit, it 
is definitely the duty of the clerk to compare his 
amount available with the minimum limit every time 
he credits stores with an amount delivered. The mini- 
mum limit thus acts as danger signal. The stock clerk 
is not likely to run past it without placing an order 
for more material ; and if he does, the responsibility is 
definitely located. 

The maximum limit ought not to prohibit the Pur- 
chasing Agent from taking advantage of a low mar- 
ket or from buying in quantities large enough to get 
a low price, but he ought to use the two limits to 
guard himself against buying excessively at any time. 

When any article reaches the minimum limit the in- 
ventory ought to be corrected by a physical count. By 
so doing the substantial accuracy of the inventory is 
assured at all times, all articles are inventoried when 
there is least labor in doing so, and the delay to manu- 
facture and the expense of an annual inventory are 
greatly reduced. 

The proper place for the perpetual inventory is in 
the Central Planning Office (See Figure 1, Article 66) 
under the Chief Planner. The Purchasing Agent and 
the Store-keepers occasionally need information from 
the inventory which they can get when they want it. 



RECOEDS — PLANNING AND DESPATCHING 



121 



This condition indicates the convenience of a general 
office in which the Chief Planner, the Purchasing 
Agent, and the Chief Store-keeper can all be located. 

114. In order that materials may be entirely under 
control, and also in order that responsibility for them 
may be properly located, all materials must be drawn 
from the Stores department on written requisitions. 

These requisitions are conveniently made up in the 
form of Material Service Cards, which are very simi- 
lar to the Labor Service Card shown in Figure 2, Ar- 
ticle 96, and are designed on the same principles. Sup- 
posing that a bonus is paid for efficiency in the use of 
materials; the fundamental data for the design of a 
material service card, in an illustrative case, are given 
in Table 4. 

TABLK 4. 



DATA WANTED FROM MATERIAL SERVICE CARDS 



By Paymaster 
Workman's Number 



Amount of material 
used 

Standard amount of 
material for the job 
Unit value of the ma- 
terial 



Value of by-product 



By Cost Accountant 

Article 

Kind of material 
Quality of material 
Amount of material 
used 

Standard amount of ma- 
terial for the job 
Unit value of the ma- 
terial 
The order number 



Amount of main prod- 
uct 

Amount and value of by- 
product 



By Planner 

Workman's Number 

Article 

Kind of material 

Quahty of material 

Amount of material 

used 

Standard amount of 

material for the job 



The order number 
Machine number, or 
other designation of 
the place where ma- 
terial is to be put in 
work 

Amount of main prod- 
uct 
Amount of by-product 



The paymaster's data enable him to calculate the 
actual and standard costs of the materials for the job 



122 APPLYING EFFICIEITCY PEINCIPLES 

and the value of by-product, if any, with which the 
workman is to be credited; and these form the basis 
of the bonus on materials, as is explained in Article 
302. 

When planning is first started, and the central plan- 
ning department's control is still necessarily some- 
what loose, it will probably be best to furnish the de- 
partmental despatchers with blank requisitions for ma- 
terial. Inspection of the despatch board from time to 
time gives warning when any job is approaching the 
need for material, and the despatcher, under the di- 
rection of the foreman, can then make out the neces- 
sary requisitions and forward them to the store-room. 
The designation of the work place on the requisition 
may serve as a move order to transport the material 
at once to the required place, or it may be desirable to 
make out a separate move order which directs when 
and where to deliver the material. 

It is usually best to transfer the making out of the 
requisitions for materials to the central planning office 
as soon as possible. 

That office will then, by its requisitions, or by requisi- 
tions combined with move orders, and by orders to tool 
rooms to have necessary tools in readiness, and per- 
haps also to set up machines, make sure that every- 
thing will be ready for a job at the time and place 
desired, and will then base its further planning on that 
assurance. 

As soon as the perpetual inventory and the bills of 
materials are ready and the requisitions for materials 
have been put into use, the central planning office when 
it receives a manufacturing order will first examine the 
inventory to see whether it has the necessary mate- 
rials. Of course, no job can be ordered into work un- 



EECOKDS — PLANNING AND DESPATCHING 123 

less the necessary materials are on hand. If they are 
not, it will be up to the planning office to see that they 
are provided as quickly as possible. 

The routing of the different copies of the material 
requisitions will vary somewhat according to circum- 
stances, but each must soon reach the officer for whose 
information it is intended. The planner's copy then 
furnishes the data for the credits which the stock clerk 
enters on his perpetual inventory as amount of mate- 
rial delivered. 

The Paymaster's copy should be filed against the 
worker to whom the material was issued. This card 
adds to this file the record of the worker's efficiency 
in the use of materials. The Cost Accountant's copy 
should be filed against whatever designation is most 
suitable to the cost system used. (See Article 103.) 
The Planner's copy should be filed against material. 

115. The perpetual inventory and the material requi- 
sitions may displace former methods which imper- 
fectly accomplished the same purpose. In any such 
case, it is important that the old methods should he con- 
tinued until the new have been thoroughly tested and 
the organization has learned to handle them. "When 
this stage has been reached the old methods can be 
discontinued. 

116. In order that planning may be done accurately, 
the times necessary for operations, that is, the Stand- 
ard Times, must be known. (The determination of 
these is discussed in Chapter X, Standards, beginning 
with Article 186.) In order that standard times may 
be realized there must be Adaptation of Conditions and 
Work to Each Other, work must be done by Correct 
Methods, and the workers must have an Efficiency Re- 
ward for approximating the standard times. Progress 



124 APPLYING EFFICIENCY PEINCIPLES 

must be made in the application of the principles here 
mentioned before Planning and Despatching can ad- 
vance further. 

117. Meanwhile, there will be considerable error in 
the plans laid down by the central planning office, and 
this error should be continually reduced, although it 
can never be absolutely eliminated. One of the main 
reasons for the use of the methods of departmental 
planning and despatching above described is that this 
error may be corrected by persons having that inti- 
mate knowledge of details which results only from 
close contact with the work. It is also necessary that 
the central planning office should be continuously and 
promptly informed of the actual facts, and should re- 
vise its main outline plans accordingly. 

It is for this reason that all outstanding service 
cards should be closed out at the close of every day or 
shift, and that all service cards which record events 
during that day or shift should be forwarded to the 
central planning office as soon as possible thereafter. 

118. The central planning office must keep records 
of its plans. At first, and possibly as long as the plan- 
ning office is merely putting into the shop orders on 
which it requires delivery on a certain date, the tickler 
file outlined in Article 91 may answer the purpose. 

Eef erring to that example of the tickler file ; at any 
convenient time before September 13, the planning 
office might put an order into Department 1 for the 
required number of Part A to be delivered to Depart- 
ment 3 on September 27. From September 14 until 
the parts were completed and delivered, the planning 
office would consult the service cards coming in daily 
from Department 1 to see what progress was being 
made on the order for Part A. As soon as there ap- 



KECOBDS PLANNING AND DESPATCHING 125 

peared to be any danger of failing to make delivery on 
the twenty-seventh, the planning office should take the 
matter up with the foreman of Department 1, and 
should revise its plans so as to obtain the best result 
still possible. Suppose, for example, that the service 
cards for the thirteenth failed to show Part A as 
started on that date. 

Consultation with the foreman might show that — 

The foreman expected to start later and still make 
the required delivery, in which case no action might 
be necessary; or 

There had been a failure to start according to 
plans, in which case, if the foreman were to blame, 
the planning department ought to report the mat- 
ter to his line superior and one or other of the fol- 
lowing actions would be necessary : 
Overtime on Part A : 

Displacement of some other order to make room 
for Part A, in which case the planning department 
would have to revise its plans and the tickler file 
for the orders displaced; or 

Acceptance of delayed delivery of Part A, in which 
case the planning department would have to revise 
all its later plans on the tickler file for this order 
so as to harmonize them with the delay, and to re- 
vise its orders to the shop accordingly. 
As the planning department develops closer control, 
it will be necessary for it to keep records of its plans 
in more detail. The items of information that it will 
need for this purpose are — 

Department in which each operation is to be performed : 

Order number; 

Article ordered; 

Quantity of finished work ordered ; 



126 APPLYING EFEICIENCY PEINCIPLES 

Final delivery date of assembled articles; 

Date and approximate hour, if possible, on which to be- 
gin assembly; 

Delivery dates of all parts constituting the assembly; 

Date and approximate hour, if possible, on which to 
begin manufacture of every part; 

Machines and other equipment which can be used for 
every operation; 

Workmen who can be used for every operation ; 

Name or symbol of every operation; 

Amount of other work which must be put through every 
operation ; 

Order of time in which all work awaiting any operation 
must be sent to it ; 

Amount and estimated time duration of all work await- 
ing every operation. 

The above information must, of course, be system- 
atically recorded in standard forms designed to suit 
the case. Knoeppel gives a very good one (''Daily 
Planning Sheet") derived from a machine shop.^ 

In proportion as the planning department's informa- 
tion on the above points is complete and reliable it 
can assume more and more detail control of shop 
operations. In so far as it lacks knowledge of any of 
them, it must leave corresponding discretion in the 
planning to the departmental foreman and despatcher. 

119. When the planning department reaches the 
stage of laying out in advance a definite day's work for 
a department, it will probably be necessary for it to 
plan the progress of every order from machine to ma- 
chine and from operation to operation in order to be 
sure that its plan is feasible and that it fits the depart- 
mental capacity. 

When this stage is reached the foreman has very 
little concern with the planning, as all that is neces- 
sary, as long as things go right, is for the despatcher 

*" Installing Eflficiency Methods," hj C. E. Knoeppel; The Engineer- 
ing Magazine Co. 



KECOEDS — PLANNING AND DESPATCHING 127 

to manipulate the despatch boards and service cards 
according to the plans of the central department. This 
is a great relief to the foreman and enables him to 
give much more attention to the technique of his work, 
to the instruction of his workers, and in general to the 
efficiency of his department. 

Referring to Figure 2, Article 96, the central plan- 
ning department should now fill a serial number in the 
blank ''Service Card No " before forward- 
ing the cards to the department. The service cards 
then constitute sufficient orders to the shop department 
for work to be done, and the serial numbers of the 
cards indicate to the despatcher the order in which the 
jobs are to be put into work. 

It is also necessary now for the planning department 
to keep closer track of progress in filling its orders than 
it could do at first by the use of the tickler file. It 
should keep records showing how far advanced every 
order should be on every day, and the actual advance 
should be noted daily from the service cards and com- 
pared with what had been planned. 

Those orders that are farthest behind are of course 
the ones that require the most forcing in the shop; 
and the planning department must revise its plans so 
as to accomplish this. 

120. However detailed the control of the planning 
department may become, the shop executives, and even 
the workers, should not be shut off from suggesting 
changes and improvements. 

121. A difficulty is apt to arise in planning in con- 
nection with articles which are damaged in manu- 
facture. Where goods are ordered to stock, or where, 
for any other reason, it is possible to leave the amount 
of the order somewhat indeterminate, it can simply 



128 APPLYING EFFICIENCY PRINCIPLES 

go through, less the damaged articles. In that case, 
those articles may be worth repairing and putting 
into salable shape, even if only as seconds. The regu- 
lar work in the shop gets along most efficiently if all 
repairs to these damaged parts and all other special 
work is put off by itself where it will be completely 
out of the way of the regular work. For example : in 
shoe factories it is customary to run a small ' ' Cripple 
Department" which is in itself a little shoe factory, 
and to send to this department all damaged shoes as 
soon as they are discovered. On account of the un- 
adapted conditions under which it works, a department 
of this kind may be very inefficient ; but, because of its 
small size, its efficiency is not a great financial con- 
sideration, while if the special work which it does is 
put into the main factory, confusion and inefficiency is 
created on a large scale wherever it goes. 

Probably it would not pay to provide expensive 
equipment for a repair or other special department on 
account of the small scale and variety of its operations, 
but it is better to do its work by hand than to lower the 
efficiency of the whole factory by putting its work into 
the regular manufacturing departments. Where a 
special department is not practicable, a few special 
workers in the manufacturing departments, out of the 
way of the regular processes, are the next best solu- 
tion. 

Where an order has to bring through a certain num- 
ber of pieces and it is possible to put any excess pieces 
into stock, it is best to start the order with sufficient 
excess to assure its bringing enough through, and to 
put the excess, if any, into stock. Where excess pieces 
can not be put into stock it is usually necessary to start 
the order with the exact number, and if any have to be 



EECORDS — PLANNING AND DESPATCHING 129 

rejected in process it is usually best to put the order 
aside until the special department has made good the 
damage, and then to start it on again. If the order is 
sufficiently large to be efficiently manufactured in part 
lots, these delays can be limited to the last lot which 
can be made to carry an excess equal to the losses of 
all the previous lots. 

Whenever work is rejected, the inspector should at 
once record the kind and amount, the nature of the 
damage and, if possible, the cause of it. This record 
may sometimes be made a part of the service card that 
ordered the operation at which the work was rejected. 
If this is not feasible, the rejection should be recorded 
on a separate form of which a copy should accompany 
the service cards to the planning office. 

The records of rejections should be kept on file, and 
at regular intervals, once a month or so, a clerk should 
go over them and summarize the nature and causes of 
damage and the amount of loss attributed to each dur- 
ing the last previous period, and should report the 
summary to the Chief of Staff. (See Diagram of Or- 
ganization, Figure 1.) The latter, if any particular 
nature or cause of damage has considerable loss at- 
tributed to it, should set about its correction through 
the line and staff organization concerned. 

122. An assembly department usually presents diffi- 
culties in planning. Here parts from several different 
departments have to be brought together to unite in 
one assembly ; and the greater the number of parts, the 
greater is the difficulty in carrying out the plans so per- 
fectly as to bring all the parts together at the same 
time. For example: in a shoe factory, lasts and 
uppers come together in the last gallery. The uppers 
have just come from the fitting department, which is 



130 APPLYING EFFICIENCY PEINCIPLES 

itself an assembly department where the outer uppers 
and the linings are assembled out of their parts and 
are also assembled with each other into the complete 
upper. The lasts have just returned from the opera- 
tion of last pulling, up to which they had travelled with 
a previous lot of uppers from the last gallery. It is 
exceedingly difficult to bring either uppers or lasts 
through to the last gallery without considerable error 
from the times calculated by the planning office. 
Therefore a store room of uppers and lasts is provided 
in connection with the last gallery, and uppers and 
lasts as they come in are put into stores to await the 
arrival of their mates. The service cards coming in 
daily will show what uppers and what lasts have 
reached the last gallery during the preceding day, and 
the planning department should start its plans all over 
from there. 

However, the delays to both uppers and lasts, and 
consequently the stock of them tied up in the last gal- 
lery, are reduced if the planning department has defi- 
nitely planned for them to come together there at a cer- 
tain time, instead of starting uppers regardless and 
trusting to their coming together hit-or-miss with the 
lasts. This is especially important in the case of the 
lasts which are expensive and quickly become out of 
date on account of changing styles, so that the factory 
needs to get along with as few of them as possible. 

123. This is the example of the sub-principle of the 
reservoir which is applicable to points where planning 
is difficult. The principle is to carry planning only up 
to the reservoir, store the product in it, and start new 
plans for operations from the reservoir according to 
conditions in it. 

The disadvantage of the reservoir is that the value 



KECOEDS PLANNING AND DESPATCHING 131 

of the goods in it is idle capital. One object of planning 
should be, therefore, to reduce the size of the reser- 
voir; and this it can do by reducing its own errors, 
since the necessary size of the reservoir is proportion- 
ate to the amount of error in the plans. 

124. Referring to the illustrative example given in 
Article 91 of a tickler-file program, it will be noticed 
that the final delivery date of the finished article is the 
starting point of the whole calculation, and that from 
this the date for every preceding event is worked out. 
This is typical, as planning works backward ; first de- 
ciding what is to be the ultimate achievement and when 
it is to be accomplished, and working out from that the 
time for the tributary events. 

125. This is directly opposite to the practice of the 
unplanned shop wherein the material drifts along the 
stream of manufacture, and the work to be done at any 
operation at any time is often left to the individual 
workman who, of course, does what is most convenient 
for him at the time without regard for its co-ordination 
with other events. 

Local efficiency, of course, should have its share of 
consideration. For example, if a long set-up has been 
made on a machine, local efficiency would require that 
it be kept and that orders requiring it should pass 
through the machine without interruption for as long 
a time as possible, but this might unduly delay some 
other order and cause great inefficiency elsewhere. The 
requirements are conflicting, and that compromise 
which gives the best all-around result should be made. 
Evidently the individual workman cannot judge cor- 
rectly. Even the foreman, unless guided by central 
planning, cannot, because he has only a departmental 
view of the matter. 



132 APPLYING EFFICIENCY PEINCIPLES 

126. Every manager recognizes, at least in theory, 
the value of co-operation and co-ordination, and an ef- 
fort to secure them will convince anyone of the com- 
plexity of the problem. No such problem can be solved 
by leaving it to chance, but this one can be solved by 
thorough planning, and by despatching according to 
plans. 

127. The ultimate ideal of planning and despatching 
is to lay out in advance for every order a definite timed 
program of progress from operation to operation 
through the plant, and to despatch it according to that 
plan — an ideal which probably can never be fully at- 
tained, but which can be continuously more and more 
closely approximated. 

128. To whatever degree of perfection planning may 
be developed, the planning department must never lose 
its ideal of continuously improving its plans in the light 
of more perfect knowledge as the event planned is 
seen more perfectly on closer approach, or as changes 
and unforeseen conditions produce unexpected situa- 
tions. 

Some people object to planning, apparently with the 
idea that a plan once laid is like a pair of steel rails 
which must be followed without deviation, or disaster 
will ensue. Any efficient plan is more like a broad 
waterway over which the navigator does indeed lay a 
course, but on which he is free at any moment to shift 
his helm, to stop, or to go astern. 

129. As soon as labor and material service cards are 
fully in use with standards determined, the foreman 
of the department has the means of knowing, at any 
time after his department receives an order for a job, 
how much direct material and how much direct labor 
ought to be spent on it, and while the job is still in 



RECORDS — PLANNING AND DESPATCHING 133 

progress he can tell whether the standard of material 
or of labor is likely to be exceeded. If the foreman 
has his own Efficiency Reward based on the efficiency 
of his department in these respects, he is apt to be 
very much interested in what the service cards show 
as to jobs in progress. If he is not, another foreman 
would be the best solution. The important point as to 
the Record is that it is so immediate that the foreman 
can know the facts while there is still a chance to save 
the money that is going to waste, and that it indicates 
to him exactly the weak points that require his atten- 
tion. 

Another point at which the foreman may control on 
the spot the direct cost of operations in his department, 
is his selection of the quality of both labor and ma- 
terial. It would obviously be a waste of good material 
to use sound oak as a core to be veneered. It is not 
quite so obvious, but might be equally wasteful, to use 
mill culls for the purpose, instead of ''sound wormy" 
chestnut. Also it might be equally inefficient in the use 
of labor to assign either a skilled mechanic or a laborer 
to a job that ought to be done by a good machine oper- 
ator. 

If the foreman accomplishes a good efficiency as to 
quantities of both material and labor used, and judi- 
ciously selects the quality of both, he evidently does 
all that he can to keep down direct costs in his depart- 
ment ; and a money statement of those costs would be 
of no interest to him, nor ought he to be held respon- 
sible for their amounts. 

When bills of material have been made out and the 
central planning office has taken over the preparation 
of requisitions for materials, the quality of materials 
for any job would evidently have become standard- 



134 APPLYING EPFICIENCy PRINCIPLES 

ized, and the foreman would not have to look out for 
that and could concentrate his attention on the matter 
of quantity. 

Planning must have become very refined before the 
central planning office can assign jobs in advance to 
individual workers. Long before that stage can be 
reached, the standard grade of worker should have 
been determined for at least a very large percentage 
of the work of a department, and these determinations 
ought to be expressed to the foreman and, for his guid- 
ance, in written standard practice Instructions. 

To what extent the foreman can be provided with 
immediate, adequate, and reliable records of his in- 
direct expenses, and to what extent he can be held re- 
sponsible for controlling them, does not admit of a gen- 
eral answer. For example, if his department has elec- 
tric drive throughout, it may be possible to show its 
power consumption continuously on a recording watt- 
meter. If it is also practicable to determine, even 
roughly, a standard of power per unit of product, the 
foreman can be given an Efficiency Eeward based on 
efficiency of power ; and it is then safe to say that ma- 
chines running idle, shafting running unoiled, and 
belts running too tight or too slack, will all interest him 
very keenly. 

On the other hand, if there is no means of separating 
his power consumption from that of other departments, 
the place to which to apply records, standards, and 
efficiency reward as to power, will vary with all the 
local circumstances. 

130. Referring to the Organization Diagram, Figure 
1, the next line superior to a foreman is a superintend- 
ent. Every superintendent is properly responsible for 
efficient operation of the group of departments that 



RECOKDS — PLANNING AND DESPATCHING 135 

come under his authority. Fluctuations in volume of 
work also interest him, as they have an important ef- 
fect on the welfare of his group, even though the 
efficiency may be satisfactory. Therefore, at frequent 
intervals, usually once every pay-roll period, after the 
close of the period there should be made out for every 
superintendent, as to every department under his au- 
thority, a statement of 

Total direct labor for the period, 
Standard direct labor for the period, and 
Efficiency of direct labor; also of 
Total direct materials for the period, 
Standard direct materials for the period, and 
Efficiency of direct materials. 

The situation of the superintendent with reference 
to indirect expenses is very similar to that of the fore- 
man, but, referring to the example of power in Article 
129, though it may not be possible to separate the 
power used by a foreman from that used elsewhere, it 
may be perfectly possible to separate from the records 
of all other power the record of the power used by the 
group of departments controlled by a superintendent 
and to set standards for it. The remarks made above 
as to power consumption and the foreman would then 
be moved up the line one step to the superintendent. 

Throughout the chain of command we ought, as low 
down as possible, to bring in records of actual quan- 
tities, standards and efficiencies. 

131. Eecords which go to executive officers should be 
designed to draw their attention forcibly to the exact 
spot where it is wanted. For this purpose graphs are 
much more effective than statements presented in tab- 
ular form. 



136 



APPLYING EFFICIENCY PRINCIPLES 



A common form of graphic record for this purpose 
is shown in Figure 3. Both actual and standard quan- 
tities will vary with the amount of work done. This 
can not be avoided; but if, as in the fifth, sixth, and 
seventh periods of the illustration, the efficiency falls 
with decreasing volumes of business (as it is very apt 
to do) the situation is doubly alarming. If, beginning 
with the eighth period, as shown, the efficiency begins 
to climb steadily, the responsibility of the officials 
concerned is satisfactorily met, no matter how the 
owners may worry about small volume of business. 

DEPARTMENT NO. 1 

_j—^" Standard Quantity 

— ^ ■ — Actual Quantity 

„,f~t"' Efflcienci) during Period 

^_^«-*— Average Efficiency 



/'Line of too % Efficiency 




2 3 4 5- 6 7 8 9 10 H 12 13 14 15 16 J7 18 19 20 21 TIME NO. OF PERIODS 
FIG. 3. GRAPHIC RECORD OP DEPARTMENTAL EFFICIENCY 

All hands are interested, however, in absolute quan- 
tity as well as in efficiency. If the actual expenditure 
should shoot up, as shown dotted in the fifth period, 
all concerned want to know why such an abnormal 
quantity was expended, regardless of the efficiency. 
It might, for example, if an unusually large amount of 
either material or labor were expended, mean a se- 
rious over-stocking, which ought to be promptly 
stopped. 

Graphs of indirect expense are peculiarly subject to 



BECOKDS — PLANNING AND DESPATCHING 137 

such irregularities, due to the fact that apparent ex- 
penditures often do not synchronize with the actual. 
For example, a lot of repairs may be made in a few 
periods, resulting in an enormous charge for mainte- 
nance during that time, while the repairs made may 
suffice for years. In such cases a graph of averages 
is especially valuable, as it shows correctly the gen- 
eral tendency in spite of temporary wide fluctuations. 
In order to cover seasonal fluctuations, the averages 
as expressed in their curve ought usually to be deter- 
mined for the year that ends with every period of the 
graph. In starting the graph, if previous figures as 
to efficiency are not available, the average should cover 
all the periods for which the periodic average is 
known, and so on, until the figures for one year are 
available. 

A well designed graph, which presents just the es- 
sential facts in a striking manner, is one of the best 
means of enabling an officer to focus his attention just 
where it is needed. (See Article 53.) Eeturning to the 
case of the superintendent : when his periodic graphs 
reach him he can quickly run over them, and those that 
show satisfactory performance, he can have filed as re- 
quiring no further attention ; but supposing the labor 
graph of one of the departments to show a falling off 
in efficiency during the previous period, the superin- 
tendent is thereby strongly notified that labor in that 
department requires his attention. 

132. Going a link further up the chain of command, 
the Factory Manager should have similar periodic re- 
ports, but more condensed. Actual totals, standard 
totals, and efficiencies of direct labor and of direct 
materials should be reported to him for the factory 
as a whole. If the showing is satisfactory, he need 



138 APPLYING EFFICIENCY PEINCIPLES 

not worry about tliem, knowing that any local inef- 
ficiency has been brought to the attention of the super- 
intendent and foreman concerned and that it is not big 
enough, at any rate, to affect the final showing. While 
actuals, standards, and efficiencies of indirect expense 
ought to be reported to officers lower down than the 
factory manager, if possible, they can certainly be so 
reported to him and ought to be. 

133. When we mount one link higher to the Presi- 
dent, or General Manager, we come to an officer whose 
point of view is different. No matter what labor, ma- 
terials, and overhead may cost, the vital thing to him 
is, "How much does the product cost?" To him, there- 
fore, should be reported periodically, amount of prod- 
uct, total actual factory cost of product, actual cost of 
product per unit, standard cost of product per unit (see 
Article 224), and efficiency of cost of product. Even 
though efficiency be one hundred per cent, he is still 
concerned to Imow whether the actual cost is low 
enough to meet competition ; and if it is not, a revision 
of the standard may be necessary. 

134. The system of reports above indicated affords 
the means of running down the cause of any excessive 
costs immediately, and of setting in motion the neces- 
sary correction. Supposing that the report to the 
President shows that some competitor has got below 
his standard cost for some article, so that a revision of 
its standard cost is necessary ; this is a matter to take 
up with the chief of staff who, through the staff or- 
ganization, should investigate and should recommend 
such measures as are feasible to reduce standard and 
actual cost. 

If, however, the reports to the President show that 
the efficiency of cost of some article of product is low, 



RECORDS — PLANNING AND DESPATCHING 139 

this is a matter to take up with the factory manager, 
for some of the factory efficiencies must be low to pro- 
duce this result. The reports to the factory manager 
show at once what these low efficiencies are. 

Supposing the report to the factory manager shows 
a low efficiency of labor, conference with the superin- 
tendents and inspection of the reports made to the lat- 
ter as to labor will show at once in what departments 
this efficiency is low. The other departments can be 
dismissed from consideration, attention can be con- 
centrated on the departments making a poor showing, 
and the factory manager is justified in demanding of 
the superintendents concerned that the efficiency in 
them be brought up. 

Examination of the service-card file by man num- 
bers in the paymaster's office will show exactly what 
workers have fallen down, and the superintendent then 
has the exact location of the trouble and can act ac- 
cordingly. The foremen concerned, however, ought to 
know already from their daily examination of service 
cards in work in their departments just where to give 
their attention to bring efficiency up and cost down. 

135. An employer to whom something of this sort 
was explained, replied that he should expect the fore- 
man to know that anyhow without any service cards. 
The only reply to this is that, as a general rule, the 
foreman does not know. In the absence of records, how 
can he? He has nothing then but general impressions 
to guide him, and experience has shown them to be ut- 
terly unreliable. 

136. Copies of the superintendent's records, men- 
tioned in Articles 130 to 133 as going to the line officers 
of the rank of superintendent and above, should go to 
the Chief of Staff as well, for while the line officers are 



140 APPLYING EFPICIEISrCY PKINCIPLES 

responsible for everything under their orders, effi- 
ciency is the special care of the Chief of Staff, and 
through the staff departments and his position as coun- 
selor to the higher line officers he can come powerfully 
to the aid of the line in improving any low efficiencies. 

137. A point which cannot be too strongly empha- 
sized in the above explanation of records is the pres- 
ence throughout, always and in every record, of the 
standard. Without this the record is valueless, except 
in so far as the officer using it can supply a standard 
from his own general knowledge. Without the stand- 
ard there is no means of knowing whether performance 
is good, bad, or indifferent ; and lacking this knowledge, 
intelligent action is impossible. 

Efficient records must be immediate and must report 
the standard as well as the actual. 

138. In Article 44 mention is made of the records of 
employees to be kept by the Employment Supervisor, 
and of their value. The principal records of this kind 
are — 

Names, addresses and qualifications of applicants 
for work; 

Specifications of the qualifications for every posi- 
tion ; 

Summarized records of every employee, includ- 
ing attendance, efficiency, and general qualifications 
in comparison with the specification for his position 
and also with a view to discovering his greater fit- 
ness, if it exists, for some other position. 

Summarized records of the rate of change of em- 
ployees, and reasons for same in every department. 
The attendance and efficiency of employees can be 
abstracted from the service-card file by man numbers. 
The record of other qualities should be obtained by 



BECOEDS — PLANNING AND DESPATCHING 141 

having every officer report regularly to the employ- 
ment supervisor on his own immediate subordinates. 

The record of rate of change of employees and of the 
reasons for change, if used to decrease this rate, 
is very valuable, as pointed out in Articles 36, 41, 
and 48. 

139. A record not commonly found is a card-index 
record of equipment, in which should be summarized 
the characteristics, first cost (including cost of trans- 
portation and installation), and history of every piece 
of equipment. To this should be added an annual esti- 
mate of its obsolescence, and of its actual value, not on 
the market but to its owner. This record is valuable as 
providing the basis for Anticipative Inspection, which 
is discussed in Article 162, and as showing the real 
depreciation. It is evident that serious mistakes in 
business policy may be occasioned by an error of tens, 
or perhaps hundreds, of thousands of dollars in fig- 
uring the annual charge for depreciation of equipment ; 
and the only way of determining the actual deprecia- 
tion with any degree of accuracy is by such a record as 
that above recommended. 

In a plant in which the belting works under condi- 
tions which are at all severe, its record should be sim- 
ilarly kept, but it is usually most convenient to keep 
it separately. The object of this record is similar to 
that of the record of the rest of the equipment. 

140. Other records which are commonly lacking are 
specifications of materials. In the absence of these the 
result is almost sure to be that the Purchasing Agent 
will buy for cheapness of first cost only. This causes 
trouble all through the manufacturing process, inferior 
finished product, and loss of reputation and business. 

141. Commonly, knowledge of setting up machines, 



142 APPLYING EFFICIENCY PEINCIPLES 

of manufacturing processes, of formulas for mixtures, 
and so forth, exists only in the heads of individual em- 
ployees. This makes the business very dependent on 
such individuals. I have seen a good sized plant which 
a few foremen could have tied up by refusing to use 
their knowledge of tools required for processes. Em- 
ployees who thus have a business in their power are 
not apt to be at all considerate in the way they use it. 
The only way to escape from this dangerous situation 
is to get such knowledge into written records. These 
records are commonly put in the form of Written 
Standard Practice Instructions. (See Article 237.) 

A large ship yard had depended for its knowledge of 
its underground wiring, piping, and so forth, entirely 
upon the memory of the foreman in charge of it, and 
he was very careful to keep this knowledge to himself. 
This method was never satisfactory, and when the fore- 
man died it resulted in such confusion that the manage- 
ment had a complete subsurface survey of its plant 
made and mapped. A by-product was the discovery 
and recovery of abandoned copper enough to pay the 
cost of the survey. 

142. I refrain from generalizing from my own ex- 
perience, but personally I have been astonished by the 
number of concerns that have no drawings of their 
products. Doing without drawings, I suppose, to avoid 
the expense of the drafting room, results in parts and 
assembled articles being designed without sufficient 
attention to the adaptability of the equipment, or to the 
co-ordination of designs with each other. This is dis- 
cussed further in Articles 156 and 158. 

143. In the beginning of betterment work, when at- 
tention is necessarily confined to the big things, a great 
many minor improvements can be foreseen which 



RECORDS — PLANNING AND DESPATCHING 14:6 

would distract the force from the matters in hand if 
they were undertaken at once. These should be re- 
corded for future reference. I have found a file of 
five-inch by three-inch cards very convenient for this 
purpose. This file should be consulted at frequent and 
regular intervals, in order to take up the matters there- 
in suggested as soon as an opportunity occurs. 

144. It would be outside the purpose of this work to 
go into an explanation of the general system of records 
connected with the management of a business, and it 
would also probably be only a review of matters al- 
ready familiar to the reader. 

145. The drafting room is commonly a department 
for the preplanning of materials and the preparation 
of instructions for their use according to the plans. In 
some cases the preplanning of materials can be further 
extended with valuable results. 

In shoe factories, for example, a standard piece of 
fabric from which uppers or linings are to be cut is 
often planned so as to cut the pieces from it with the 
least waste; and this pattern sheet, with the pieces 
marked on it as they are to be cut out, is furnished to 
the operator of the dinking machine, who is expected 
to cut pieces of that fabric according to the pattern. 

Hides cannot be cut to a standard plan, because 
every hide is different from every other. The cutting 
of every hide must therefore be planned by itself. A 
similar condition exists in cutting steel shapes for 
structural work in jobbing shops, in cutting up lumber 
for furniture parts, and in other places in industry. 

In such cases a workman commonly cuts every piece 
with only such preplanning as he can do in his head 
as he goes along. Common Sense, confirmed by ex- 
perimental tests, shows that a man can plan such a 



144 APPLYING EFFICIENCY PRINCIPLES 

piece before cutting with much less waste of material 
than he can cut it piece by piece without preplanning. 

A difiSculty exists in recording the plans so that they 
can be followed in cutting. Where patterns or tem- 
plates can be laid on the piece, this furnishes a quick 
and easy way of planning, and the plan can then be 
very quickly recorded by spraying the piece with suit- 
able pigment from an air brush. This has the further 
advantage that the pigment is deposited on the scrap 
only. 

The handling of the piece is about doubled by pre- 
planning, marking, and cutting to plans, as compared 
to cutting without preplanning. 

On the other hand, the cutting of preplanned work 
can often be done by cheaper labor than is necessary 
to cut work not so planned. 

Such preplanning of materials, such as those above 
mentioned, involves, therefore, increased cost due to 
the air brush equipment and to additional handling, 
and offers economies by decreasing the waste of ma- 
terial and in i educing the labor cost of cutting. 

It is a matter for independent investigation in every 
situation as to whether such preplanning will show a 
net loss or gain in total cost. The making of such in- 
vestigations is discussed later in Articles 186 to 213, 
and in Article 221. 



Chapter IX 

ADAPTATION OF CONDITIONS AND WOEK TO 
EACH OTHER 

146. 

IN order that correct standards may be determined, 
the work and the conditions must be adapted to 
each other, or at least the effect of such adaptation 
must be foreseen in setting the standards. In order 
that correct standards may be attained, such adapta- 
tion must actually have been effected. For example, 
time studies may show a low efficiency due to a lack of 
any of the adaptations of conditions listed in Article 
154, or of others ; and obviously the inefficiency can be 
corrected only by removing its cause, that is by adapt- 
ing the condition. 

147. Since there is usually only one best, adaptation 
generally results in making conditions uniform; hence, 
the principle of adaptation is often called the ' ' stand- 
ardization of conditions. ' ' For example, a progressive 
factory manager on taking up work with a certain com- 
pany found that in the punch-press department iden- 
tical machines were running at widely different speeds. 
The question of speeds was studied and the best speed 
for every type of press was determined. Every press 
of the same type was then brought to the same speed. 

145 



146 APPLYING EFFICIENCY PEINCIPLES 

Obviously, the time to do any job on one of tbese 
presses was dependent on the speed of the press itself ; 
hence, with all the presses running at different speeds, 
there would have been needed for every job as many 
standard times as there were presses. It is evident 
how much such a condition would have complicated the 
always complicated task of planning. 

For a press running below the proper speed, the time 
to do a job would evidently be longer than necessary, so 
that a standard time for the slow machine would not 
represent good performance. This further exemplifies 
the fact that conditions must be adapted before correct 
standards can be attained. 

148. Adaptation of conditions does not always lead 
to uniformity, or standardization. For example, in the 
same punch-press department a small amount of work 
was fed hot to the dies. For this work one press of 
each of the smaller types was fitted with a gas heater. 
A blind application of standardization would have led 
to the fitting of the same heater on every press of those 
types, which would have been a waste of money. 

Mention has been made in Article 4 of the fact that 
one must sometimes adapt the work to the conditions, 
instead of adapting the conditions to the work. 

149. It might seem at first glance as if adaptation 
must be done thoroughly before any other betterments 
could be undertaken, but this is not the case. In the 
chapter on Planning it was explained that crude plan- 
ning may be installed to the considerable improvement 
of efficiency in advance of adaptation of conditions. In 
Article 55 it was pointed out that instruction is the 
complement of adaptation, effecting by increase of 
skill in the individual what is not accomplished by 
adaptation. In fact, every one of the other principles 



ADAPTING CONDITIONS AND WOKK 147 

is capable of some application in advance of adaptation 
of conditions. 

Some adaptations are very expensive and the owners 
of the business may not be able to finance them until 
money has been saved in other directions. The rout- 
ing in many American plants is not good. As ' ' rout- 
ing" is used by many people in a sense very similar to 
that of ''planning," I define it for the purpose of this 
discussion, as the route or path followed by the ma- 
terial in moving from operation to operation through 
the plant. Any extensive remodeling of the routing 
must be very expensive both in itself and by interfer- 
ing while it is in progress with the regular work of the 
plant. The owners of a plant may well feel that they 
need to be helped in other ways before anything so rad- 
ical can be undertaken. 

In a furniture factory in which the routing was ap- 
parently bad, time studies failed to show any consider- 
able loss from this cause. This would not justify aban- 
doning all intention of doing anything with the routing, 
but it did justify putting it out of consideration as a 
matter for early attention. 

All proposed betterments, and especially those in- 
volving any considerable expense, should be subjected 
before they are undertaken to careful analysis by time 
studies or otherwise; their probable cost ought to be 
estimated and assurance ought to be obtained that they 
will at least repay the expense. 

On the other hand, there may be unadapted condi- 
tions so bad that very little progress can be made until 
they are corrected; or there may be others which can 
be corrected at small expense with large gains in effi- 
ciency, and are, therefore, among the most advantage- 
ous objects of early attention. 



148 APPLYING EFFICIENCY PRINCIPLES 

One of the things for investigation in connection 
with the selection of the point of attack (see Chapter 
XVIII) is whether there are related to it any such 
unadapted conditions ; and, if so, how much money can 
be saved by adapting them, how much the adaptation 
will cost, and how long it will take. 

150. There are several means of obtaining this in- 
formation. The most important of these is the time 
study, or, in the case of materials, a similar analytical 
study of them. In making either a time study or an 
analytical study of the use of any material, care should 
be taken to note collateral information that may be of 
use for other purposes than the direct one of the study 
itself. Such collateral information naturally contains 
much of value as to conditions, for example, in Table 
6, Article 166, a time study to determine profitable divi- 
sion of labor, in the remarks opposite Operations 1, 2 
and 3, the cause of low efficiency is noted as an un- 
adapted condition, incorrect location of the truck con- 
taining the raw materials ; and opposite Operation 10 
is noted the unadapted condition of poor location of 
the piles of material delivered from the operation. In 
investigating the conditions in connection with the se- 
lection of the point of attack it may be necessary to 
make some studies expressly to reveal unadapted con- 
ditions. Such a study would usually be like that of 
Table 12, Article 202, to which its purpose is similar 
but more specialized. 

Some conditions are capable of investigation and 
analysis by other means. I have investigated routing 
by marking lots of material conspicuously, following 
them through the process and recording their move- 
ments. The conspicuous marking is to enable the ob- 
server to make full use of his time by following up a 



ADAPTING CONDITIOlSrS AND WOEK 149 

large number of lots at once. If reliable records of the 
movement of material in process exist, the same thing 
can be done more efficiently from the records, especial- 
ly if the movement can be traced on drawings in- 
stead of having to walk over the plant to do it. The 
power plant can be thoroughly investigated by means 
of a scientific test. Other apparatus is capable of in- 
vestigation in the same way. The practical limit to 
the use of such tests is usually that of expense. 

As indicated in Articles 12 and 13, the statements of 
the minor executives as to their troubles also contain 
much valuable information on conditions. 

The above sources of information are available at 
the very outset of betterment work. As Eecords and 
Planning and Despatching are developed, other sources 
are opened up. 

Any cases of extraordinarily high or low efficiency, 
as shown by the service cards, the planning department 
should report at once to the chief of staff, and he 
should have them investigated promptly in order to 
learn the facts while those unrecorded are still fresh 
in the memories of the people concerned. A case of 
very high efficiency may have been due to the chance 
occurrence of some very favorable conditions. Imme- 
diate investigation may reveal what they were ; and it 
may then be possible to produce them regularly, and 
thereby to make an improvement, not only of the ac- 
tual, but also of the standard performance. Very low 
efficiencies should, of course, be investigated so that 
their causes may be ascertained and the unfavorable 
conditions removed. 

The mere effort to plan will reveal unadapted con- 
ditions as obstacles to the plans. Note should be made 
of these obstacles and, if it is not desirable at once to 



150 APPLYING EFFICIENCY PEINCIPLES 

undertake their removal, they should be recorded for 
attention later, as reconunended in Article 143. 

151. Mention has been made in Article 104 of the 
file of Exception Cards to be kept in the Cost Depart- 
ment. As fast as planning and despatching is installed 
this becomes a complete record of all delays, except 
those of the most trifling character, throughout the 
plant, together with a statement of the nature of every 
delay and, if possible, of its cause. At regTilar inter- 
vals, at least once a month, a clerk should go through 
this file and should summarize the money loss due to 
every nature and cause of delay, and should report the 
summary to the Chief of Staff. 

If any nature or cause of delay has attributed to it 
any considerable loss, the Chief of Staff ought to in- 
vestigate through the proper members of the staff or- 
ganization the possibility of preventing or, at least, 
reducing the amount of such delays in the future ; and 
if any such means are found to be feasible, he should 
set about putting them into effect through both the line 
and staff organization concerned. 

152. After the card index of equipment, recom- 
mended in the chapter on Eecords, is installed, it will 
be found that the history of every piece of equipment 
therein contained will show whether any equipment 
suffers from a continually recurring cause of trouble, 
or whether any cause of trouble affects large numbers 
of machines. This record is therefore the place where 
unadapted conditions with reference to equipment will 
make themselves apparent. With a view to discover- 
ing and remedying such conditions of importance, rou- 
tine measures should be installed with reference to 
the card index of equipment like those recommended 
above for the file of Exception Cards. 



ADAPTING CONDITIONS AND WOEK 151 

153. The following adaptations of conditions are im- 
portant in every plant, no matter what the nature of 
the business is; 

Location of plant 

General cleanliness and good order 

Manufacture of as few varieties of product as possible 

Permanence of type and style of product 

Suitability of product to equipment and of various articles 
of product to one another. 

Volume of production equal to plant capacity 

Orders in size or quantity for efficient manufacturing 

Efficient equipment 

Readiness of equipment for use when and where wanted 

Routing (See Article 149) 

Accurate knowledge of physical quantities involved in the 
processes 

Readiness of personnel for service when and where wanted 

Division of labor 

Safety of personnel 

Ventilation 

Lighting 

Warmth 

Work height 

Suitable hours of work and periods of rest 

Suitable materials 

Clean, orderly and properly arranged storage 

Standardized location of stores 

Prompt and accurate inspection 

Supply of material when and where wanted 

There are other adaptations which are taken care of 
by the application of the other principles of efficiency, 
and there are still other adaptations which are peculiar 
to every particular case. 

154. Location of plant. Harold V. Goes sums up 
this matter in a systematic analysis reproduced on the 
following pages : ^ 

^ ' ' The Kehabilitation of Existing Plants, ' ' The Engineering Maga- 
zine, July, 1915. 



152 APPLYING EFFICIENCY PEINCIPLES 

Factors governing the location of an industrial plant. 

(1) Proximity of raw material market 

a — Rail service 
b — Water service 
c — Supply 

(2) Proximity to consumers' market 

a — Large cities 

b — Rail service 

c — ^Water service 

d — Advertising value or influence of plant 

e — Competitors 

(3) Labor market 

a — Character of labor and supply 

b — Percentage of unemployed females (women and 
girls) 

c — Percentage of unemployed boys (above legal fac- 
tory age) 

d — ^Price of labor — cost of living 

e — Specialization of labor 

f — Influence of climate 

g — Associations or unions 

(4) Power 

a — Price and character of fuel (coal, gas, oil) 
b — Hydro-electric or water power 
c — Central station 

(5) Influence of climate 

a — On labor 
b — On product 

(6) Utilization of waste products 

a — Disposal of waste products 
b — Market value of waste products 
c — Cost of disposing of the same, if the material 
is unmarketable 

(7) Perishability 

a — Raw materials 
b — Finished product 

(8) Freight rates 

a — On raw materials 
b — On finished products 

(9) Legislation, regulation or ordinances 

a — State legislation (corporation laws, taxes, em- 
ployers' liability) 

b — Municipal, town, or county regulations or ordi- 
nances (taxes, factory building inspection) 



ADAPTING CONDITIONS AND WORK 153 

(10) Banking facilities 

a — Size — ^handling pay-rolls, etc. 

b — Credit 

c — General utility 

(11) Site of real estate (city, suburb, country) 

a — Price 

b — Character of soil 

c — Foundations 

d — Cost of preparing site 

e — Floods 

(12) Building Materials 

a — Local sand, gravel, etc. 

b — Crushed stone 

c — Brick 

d — Timber 

e — Steel 

f — Cement 
As previously noted, manufacturing conditions change and 
we find when we study the conditions governing the location 
of an industrial plant that the early industries, particularly 
in the Eastern States, were located where we find them on 
account of the dominating influences of Numbers 1, 2, 3, and 
4 of the factors shown in the foregoing list. It is evident that 
Numbers 1 and 2 are readily susceptible to changing indus- 
trial conditions as the country develops. We find that 4, 8, 
and 9 are giving us, in certain cases, considerable concern. 
It has been noted that different kinds of industries have a 
tendency to concentrate in particular localities. Among the 
causes of this concentration are the above mentioned factors. 
The most important of such factors to be considered are : 

1. Proximity to raw material 

2. Proximity to market 

3. Proximity to labor market 

4. Proximity to power 

Suppose, for example, for a particular industry, that 1 and 
2 have shifted so as to bring 8 into prominence. On the 
other hand, 3a, 3d, 3e, 4a, 4b, 9, and 10 are more advantageous 
to the industry or business in question than to competitors 
to whom 1 and 2 are more favorable, and in which 8 is of 
minor importance. It is apparent that 1 and 2 exercise less 
and less influence as the problem of transportation becomes 
less important economically. In consequence 3 and 4 become 
predominant factors. This deduction leads us to the study 
of the ways and means of minimizing the effects of 1 and 2 



154 APPLYING EFFICIENCY PBINCIPLES 

and of accepting the advantages that accrue from 3, 4, 9, 
and 10 by means of proper plant adjustment, reorganization, 
and rehalDilitation. Let us see, then, if we can strike a balance 
of the various factors entering the problem that will help us 
to intelligently decide the question. 

By drawing up a list of questions that are a result of ana- 
lyzing the situation and ascertaining the facts, we find that 
practically fourteen items cover the important factors relat- 
ing to the present plant location and that seven items suffice 
for the consideration of a new location. 

PRESENT LOCATION 

1 P. L. — ^What is the investment in the present plant? 

2 P. L. — How much of it is -fixed capital? 

3 P. L. — ^What proportion of 2 P. L. could be recovered by 

the sale of the property? 

4 P. L. — How much additional property would have to be 

acquired to properly develop the plant? 

5 P. L. — What would the investment be? 

6 P. L. — Is the labor market satisfactory ? 

7 P. L. — Is the raw material market satisfactory? 

8 P. L. — Are the shipping facilities adequate ? 

9 P. L.— Can 8 P. L. be made so ? 

10 P. L. — Can the present buildings be suitably altered to 

adequately serve the business? 

11 P. L.— What will 10 P. L. cost? 

12 P. L. — Can the present buildings properly be made a 

part of a logical comprehensive development of 
the plant? 

13 P. L. — ^What are the fixed charges of the present plant ? 

14 P. L, — ^What is the production cost per unit? 

NEW LOCATION 

1 N. L. — ^What will the land for a new site cost? 

2 N. L. — What will the buildings cost when completed and 

ready for occupancy ? 

3 N. L. — ^What will be the fixed charges on 1 N. L. and 

2 N. L. ? 

4 N. L. — How much will 1 N. L. and 2 N. L. be reduced by 

3 P. L.? 

5 N. L.— Will 6 P. L., 7 P. L. and 8 P. L. and other consid- 

erations be sufficiently improved to effect pro- 
duction cost 14 P. L.? 



ADAPTING CONDITIONS AND WORK 155 

6 N. L. — Will the production cost per unit be lowered? 

7 N. L. — Will the margin between the selling price and 

production cost pay 3 N. L. plus a sinking fund 
and leave sulRcient profit to warrant the under- 
taking? 
If we tabulate the facts brought out in any given case 
(such for instance as the assumed one) the mind can more 
readily compare them and can intelligently weigh the infor- 
mation with a view to securing the proper balance. 

Obviously nothing more than a summary of a ques- 
tion of this magnitude can be given in the treatment 
of the general subject of Efficiency. 

155. General cleanliness and good order. In a plant 
of considerable size one of the factories was conspic- 
uous for its efficiency. The orderly state of everything 
connected with it also at once attracted attention, and 
it was as markedly superior in this respect to the rest 
of the plant as it was in efficiency. 

The superintendent in this factory told me that he 
had served in the United States Navy, and that he 
could never get over "wanting to keep everything 
ship-shape. ' ' 

The cleanliness of his factory and his having a place 
for everything and everything in its place was not the 
only cause of high efficiency, for he was thoroughly 
versed in the technique of the difficult processes under 
his control and very attentive to them; but certainly 
neatness and good order were among the causes of that 
efficiency. 

156. Manufacture of as few varieties of product as 
possible. An ideal plant for the development of a very 
high factory efficiency is one in which a single product 
is made in very large quantities. The truth of this is 
so well known to manufacturers that argument is un- 
necessary. 



156 APPLYING EFFICIENCY PEINCIPLES 

Unfortunately, selling efficiency is opposed to the 
attainment of this condition. It is very much easier to 
sell the customer just what he wants than anything 
else, and it may be necessary to give him his way to a 
considerable extent to sell him anything at all. 

If the sales department could have its way without 
limit the product would be varied endlessly, but it does 
not pay to sell what cannot be manufactured at a profit 
any more than it pays to manufacture what cannot be 
profitably sold. Hence, in practice, manufacturers are 
forced to a compromise, in which the problem is to rec- 
oncile efficiency of manufacturing with efficiency of 
selling. 

By varying assemblies of only twenty-six letters, we 
get the immense variety of vocabulary of the western 
European languages, and there is no limit to the possi- 
bilities of additions to them. 

Out of a small number of standard parts an immense 
variety of assembled product can be built. 

There are many concerns struggling with the prob- 
lem of reconciling manufacturing and selling efficiency 
who have never given this axiom thorough application. 

In order to do this, it is necessary to go over the 
product thoroughly, and to reduce all the component 
parts to the smallest possible number of standard 
pieces. 

A stock of these standard parts must then be main- 
tained, and the stock must be covered by a card index 
perpetual inventory or stock ledger (see Article 113) 
which should carry maximum and minimum limits for 
every part. Suppose that each of three assembled ar- 
ticles, which we may call 1,' 2, and 3, contains one of 
part A. Suppose that fifty of article 1 are ordered 
from the factory. The planning department should 



ADAPTING CONDITIONS AND WORK 157 

send requisitions for the parts, or worked materials, 
to the stock room ; the latter should deliver them to the 
assembly department, and the planning department 
should send the latter an order for fifty of article 1. 

Confining our further attention to part A, the stock 
clerk would credit the fifty parts on his inventory and 
would strike the running balance. 

If the stock were not drawn down to near its mini- 
mum limit, he would not order any new parts ; but if 
the minimum were approached, he would call on the 
planning department to order from the shop enough 
parts to bring the stock up to the maximum. If the 
part were used in three different articles, the number 
of parts ordered would average three times what would 
be made in single lots for one article. 

The application of the above methods is not limited 
to parts which are absolutely identical. Parts which 
differ somewhat from each other and different sizes of 
the same part should be designed so that they will go 
through as many as possible of the same operations 
with the same set-ups. These parts can be combined 
in manufacture to the increase of factory efficiency. 
Every part should carry on its card in the perpetual in- 
ventory, or stock ledger, a reference to the parts with 
which it combines in manufacture, so as to enable the 
stock clerk to take advantage of these combinations in 
ordering. 

For example, returning to the illustration used 
above, suppose that part A of articles 1, 2, and 3 goes 
through operations I, II, III, and IV. Suppose that 
part A' of articles 6, 8, and 10 can be designed so as 
to go through operations I, II, and III with the same 
set-ups that are required for those operations by part 
A of articles 1, 2, and 3, but that it undergoes operation 



158 APPLYING EFFICIENCY PEIKCIPLES 

VII instead of operation IV. The perpetual inven- 
tory card of Part A would bear a note, ''Combine in 
ordering with part A' of articles 6, 8 and 10." The 
part A' card would bear a similar reference to part A. 

When the stock clerk got the supposed requisition 
for fifty of part A and found that its stock was drawn 
down low enough to justify him in ordering more, he 
would look for the cross reference on its card and 
would then see the card for part A'. Supposing that 
he found that he had on hand 76 of part A', and that 
its maximum limit was 200, he would then call on the 
planning department to order from the shop 124 of 
part A' to put through operations I, II, and III with 
the lot of part A ordered at the same time. 

The above methods of design in standard parts, 
standard parts carried in stock, perpetual inventories 
with maximum and minimum limits and cross refer- 
ences, and planning, furnish a means of reconciling a 
large variety of finished product and good efficiency of 
selling with manufacturing the minimum variety of 
parts in large quantities and good factory efficiency. 

157. Permanence of product as to type and style. 
There is hardly anything that causes more inefficiency 
in a factory than frequent changes of the product. 
Such changes throw everything into confusion, with 
resulting wastes that do not need explanation. In a 
plant in which this sort of thing was carried to an ex- 
treme, I once found two of the employees who were 
best acquainted with the product discussing and unable 
to decide whether a supply of a certain part that was 
in stock could be used in the assembly of the latest 
model or not. The only member of the organization 
who could tell was a member of the sales department 
who was away on the road. 



ADAPTING CONDITIONS AND WOKK 159 

If I may judge from my own experience, a large pro- 
portion of such changes are needless and represent 
merely weak yielding to the whims of some customer, 
or to the fancied necessities of some salesman, and can 
be stopped at once by the firm action of the General 
Manager, and in no other way. 

Of course there must be change, otherwise there will 
be no progress, and there ought to be a continual search 
for beneficial changes. If the plant is of any size, these 
matters ought to be referred to an Experimental and 
Eesearch Department (see Organization Diagram, 
Figure 1, Article 66) to work out and standardize be- 
fore they are put into the manufacturing departments. 

If the recommendations of the preceding section as 
to design in standard parts are carried out, and 
changes are first thoroughly tested in a separate de- 
partment, a necessary change can be localized on a few 
parts with the minimum of effect on the manufacture 
of the article as a whole, and consequently with the 
minimum loss of factory efficiency. 

The problem is closely akin to that of repairs and 
special work, which is discussed in Article 121. There 
is, of course, the type of plant which does only repair 
and special work. This is, in effect, a special depart- 
ment for all its customers, serving them by keeping the 
inefficiencies of special work out of their plants, and 
taking them upon itself. Standards for such a plant 
must necessarily be lower than for a manufacturing 
plant, and its costs must be correspondingly higher. 
The work of such a plant may be just as profitable as 
that of a manufacturing plant, provided it is able to 
get prices proportionate to its costs ; and this depends 
largely upon its ability to show its customers what its 
costs really are and that its prices are reasonable. 



160 APPLYING EFFICIENCY PKINCIPLES 

There are also plants which make articles for per- 
sonal use, in whose sales frequent changes of style are 
an immense factor. Such plants must seek efficiency by 
other means than permanence of product. Their 
profits depend also upon getting a proper price, which 
with them depends largely upon skillful advertising 
and salesmanship ; but it is important for them to know 
their costs in order to know what prices to demand. 

Therefore, to plants of both these types good cost 
keeping is of extraordinary value. 

158. Suitability of product to equipment and of va- 
rious articles of product to each other. In the engi- 
neering industries very great attention is given to this 
adaptation; but as I have seen other industries, their 
attention to it is altogether inadequate. 

The matter of suitability of product to the equipment 
will come to a head in the costs by articles which, as 
recommended in Articles 133 and 134, should be period- 
ically reported to the General Manager. If any article 
is not suited to the equipment and costs are correctly 
kept, the fact will be bound to show in an excessive cost 
of that article. Tracing back by the methods described 
in Article 134 will show where the trouble is. 

Subordinate officials are likely to know already 
through the more detailed records that come to them, 
but it may be necessary for the matter to come to the 
attention of the General Manager for all that, because 
it rests with him, or perhaps even higher up, to say 
what the product shall be. That being decided by 
higher authority, the factory executives have to make 
it as best they can. 

Suitability of various articles of product to each 
other is discussed in Article 156, but it has many ad- 
vantages other than those brought out there. For ex- 



ADAPTING CONDITIONS AND WORK 161 

ample, in a plant manufacturing any kind of hollow 
ware, the ability of different articles to "nest," that is, 
to stow compactly inside of one another, has a great 
effect on the efficiency of space both in storing and in 
shipping. 

Evidently, if a concern manufactures more than a 
very few articles, the maximum suitability of any part 
or article to the equipment and to the rest of the line 
can be obtained only by careful consideration of this 
very point in connection with its design. Such con- 
sideration is very much facilitated by having among 
the records a complete drawing of everything regu- 
larly made. 

On this point H. B. Lange^ says : 

To appreciate the field of opportunity for standardiza- 
tion it is to be noted that many works organizations maintain 
engineers who make this work their sole function. It has 
been often demonstrated that on repetitive work low costs 
can be accomplished by reducing all product to a unit basis 
without reference to the final assembly. Where working 
within limits of allowable variations it would seem advisable 
to draw one part only on sub-division of a drawing sheet — 
preferably of letter sheet size — with a separate part list and 
an arrangement drawing giving the assembly information. 
Proper filing and classification of prints or drawings assist 
in selection of parts already in use and in revealing parts 
of similar character which might be consolidated for stand- 
ard adaptation. The cost of drawings is negligible compared 
with accrued benefits. Mounting prints on straw-board and 
keeping them filed when not in use is economy. Standardi- 
zation can be furthered by a showing on a letter-size sheet 
the part with a list below of the differing dimensions. 

Further, unless the business is very small or the 
product consists of a very small variety of articles, 
adequate consideration of this point will be impossible 
for people who have much else to do. This calls for 

* Journal of American Society of Mechanical Engineers. 



162 APPLYING EFFICIENCY PRINCIPLES 

the inclusion of Design under the Experimental and 
Eesearch Department shown in the Organization Dia- 
gram, Figure 1. 

159. Volume of production equal to plant capacity. 
The presence in a plant of definite equipment and per- 
sonnel means the ability, at maximum efficiency, to per- 
form a certain amount of work. Fortunately, the ef- 
ficiency varies only slowly as the volume of production 
varies on each side of the maximum point, but evi- 
dently a point must be reached where any more produc- 
tion means a lowering of efficiency due to poor work- 
manship and spoiled work as a result of hurrying, and 
if production falls below what will fully employ the 
equipment and personnel, idleness both of workers 
and of machines results. 

The working force, of course, can be reduced, but 
must then be correspondingly increased when normal 
production is resumed, so that this deprives the em- 
ployer of the efficiency due to permanence of personnel. 

There are two main fluctuations of volume of pro- 
duction. One is seasonal, and the other is due to the 
general condition of business. 

Seasonal fluctuations are partly due to natural 
causes, like inability to obtain raw materials except at 
certain seasons, as in the canning industry, and are 
partly due to the habits of the trade. The former fluc- 
tuation must usually be accepted, but up to date equip- 
ment may be able to reduce it, if not to remove it. 
Speaking of seasonal fluctuations, Dennison says : 

The effect of weather conditions in other trades as in the 
candy trade, for instance, has been considerably helped by 
the refrigerating process; and other technical means can be 
found to avoid these other difficulties, if we are only per- 
sistent enough about it. 



ADAPTING CONDITIONS AND WOKK 163 

As to trade habits, several determined attempts to 
correct the seasonal fluctuations due to them have been 
successful. 

In estimating financial results of betterment work in 
Table 15, Article 383, 5 per cent of the sales price at 
maximum production was deliberately set aside for the 
benefit of the customer. If the seller does this (or 
something similar) he can demand of the buyer that in 
order to obtain goods at the lower price the latter shall 
give him such notice as will enable him to smooth out 
the seasonal fluctuations due to trade habits. 

Fluctuations can, of course, be reduced by manufac- 
turing to stock in dull times and selling from stock in 
good times, but this involves a risk of which those in 
business control must judge for themselves. 

However, if the manufacturer by giving the cus- 
tomer a share in the benefits of increased efficiency can 
induce in the latter a preference for his goods, he can 
manufacture to stock with the greater confidence. 

Even if the employer cannot avoid fluctuations of 
volume of output, he can minimize the resulting in- 
efficiency by making his organization elastic. 

Necessarily the skilled worker must be kept, if pos- 
sible, because he can be replaced only with difficulty. 
The unskilled worker can be hired off the street at any 
time. M. W. Alexander estimates the average cost of 
changing an employee as shown in Table 5, page 164. 

Evidently cost as well as facility of change requires 
that changes should be confined to Group D as far as 
possible, and then to Group E. This can be effected 
by recruiting according to the method outlined in Ar- 
ticle 35, and by practicing division of labor in such a 
way as to separate the skilled from the unskilled oper- 
ations, as illustrated in Table 6, Article 166. 



164 APPLYING EFFICIENCY PRINCIPLES 







TABLE 5 
COST OF CHANGING ONE EMPLOYEE 

Class of Employee 
New Employees 


• 


Re-Hired 
Employees 


Group 


Hiring 


Instruc- 
tion 


Wear Reduced Spoiled 
and Pro- Work 
Tear duction 


Total 




A 
B 

c, 

D 
E 


$0.50 
.50 
.50 
.50 
.50 


$7.50 

15.00 

20.00 

2.00 

7.50 


$10.00 $20.00 $10.00 
10.00 18.00 15.00 
10.00 33.00 10.00 

1.00 5.00 

1.00 20.00 


$48.00 

58.50 

73.50 

8.50 

29.00 


$10.00 

20.00 

35.00 

5.00 

10.00 



Group A comprises highly skilled mechanics who must have practiced 
their trade for a number of years in order to attain the required de- 
gree of all-around experience and proficiency ; 

Group B comprises mechanics of lesser skill and experience who can 
acquire an average degree of proficiency within a year or two; 

Group C contains the large number of operatives usually known as 
piece workers, who without any previous skill or experience in the par- 
ticular work can attain fair efficiency within a few months, somewhat 
depending on the character of the work; 

Group D includes all unskilled productive and expense laborers who 
can readily be replaced in the course of a few days; and 

Group E is composed of the clerical force in the shops and offices. 

As there shown in the Standardized Operation, the 
stock sawyer's work can be separated into those opera- 
tions which he must do himself because they require 
skill, or cannot be done by another without interfering 
with the sawyer, and certain unskilled operations which 
any strong laborer can do for him. When there is 
plenty of work a laborer can be employed, and he and 
the sawyer can work according to the Standardized 
Operation. When there is insufficient work, the la- 
borer can be laid off and the sawyer can do all the 
work. 

Similar methods can be applied to many manufac- 
turing operations, and by so doing a large amount of 
elasticity can be imparted to the organization. That 



ADAPTING CONDITIONS AND WORK 165 

is, it can be expanded and contracted on short notice 
and with minimum injury to its efficiency. 

Team work in the organization comes to the front 
as a palliative of the evils due to fluctuations in the 
volume of production. On this point, Dennison says : 

One influence that may work toward the betterment of sea- 
sonal irregularities is the closer relation between the manufac- 
turing and the selling ends. This we have found, ourselves, 
to be extremely valuable. Letting both of these departments 
run without intimate connection caused very considerable 
difficulties, whereas, when we brought them together and made 
each serve the other, we found large improvements in getting 
orders out earlier for delivery, anticipation of orders wher- 
ever possible, etc. 

160. Orders in size or quantity for efficient manu- 
facturing. 

Let jS'=time to set up a certain machine. 
Let T=time to perform the operation on one piece. 
Let A^=number of pieces machined at one set up. 
Then, if there is no loss of time outside of setting up, 

NT 
Efficiency of use of machine '= ^-.jrr 

The relation of N to Efficiency is plotted in the curve 
OB of Figure 4 for the case in which 8 equals T. Evi- 
dently, in any case as N increases, the curve continu- 
ally approaches but never gets quite up to the line of 
100 per cent efficiency, and reaches a point, in this case 
B, where the gain from further additions to the size of 
the order is very slow. 

Usually, however, there are inefficiencies whose 
amount is about directly proportionate to the size of 
the order, for example, those due to spoiled work. The 
inefficiency due to these losses would be approximately 
expressed by a straight line OF. The intercept, KL, 



166 APPLYING EFFICIENCY PEINCIPLES 

represents at any point the net effect of tlie number of 
pieces on the efficiency. At that value of N for which 
the tangent to OLB is equal to the tangent of the angle 
made by OKMF with the axis of N, the intercept has 
its maximum value ; and if the number of pieces in the 
order exceeds this, the final efficiency will be decreased. 

In many plants these considerations may be of no 
importance; but in some cases, like those shoe fac- 
tories in which orders are sent through in certain defi- 
nite numbers of pairs and must bring through an exact 
number, and in which any spoiled work causes consid- 
erable trouble and delay, the size of order which will 
produce maximum efficiency is of much importance. 

What this size of order should be can be determined 
only by sending through orders of various sizes and 
keeping records of the results. It is impossible to keep 
all the conditions, except the value of N, even approxi- 
mately constant until betterment is very far advanced ; 
but very much earlier it may be possible to determine 
a working approximation to the most efficient size of 
the order. This is the more feasible because a glance 
at Figure 7, Article 341, shows that the intercept KL 
will vary only slowly on each side of the maximum 
point. 

161. Efficient equipment. This is the condition 
against which an American plant is least likely to of- 
fend. Having plenty of equipment and having it up to 
date is a hobby of American manufacturers. 

In fact, the national sins are to scrap equipment 
while it is still valuable, thereby burdening the plant 
with a perpetual fixed charge for the interest on the 
value written off, and to have too much and too big and 
expensive equipment, leading to idle equipment time 
and excessive equipment burdens. 



ADAPTING CONDITIONS AND WOBK 167 

y^/00 Per Cent 




'° I 2 3 4 5 6 7 8 9 10 II fiL 13 14 15 16 17 16 19 20 2U2 25 24 25 26 27 28 29 50 3J 32 
N= NUMBER OF PIECES 

FIG. 4. EFFECT OF SIZE OF ORDER ON EFFICIENCY 

As Harrington Emerson says, ' ' The American plant 
is usually over-equipped and under-supervised." 

Usually, on undertaking betterment work, the effort 
should be to increase the efficiency of what is already 
in the plant rather than to hasten to newer and better 
equipment. 

In connection with the efficiency of equipment, the 
excellences of electric drive are so old a story that 
they require nothing more than mention here ; but it is 
well to call attention to the fact that the choice between 
alternating and direct current, then among the differ- 
ent classes of motors of each kind, then the choice be- 
tween single and group drives, and finally the selection 
of motors of capacity to give the best efficiency, pre- 
sents a problem of so much complexity that it can be 
properly solved only by the joint labors of two experts, 
one to decide what the machines need and another to 
determine the motors to supply it. 

162. Readiness of equipment for use when and where 
wanted. In order that equipment shall be ready for 



168 APPLYING EFFICIENCY PRINCIPLES 

use when and where it is wanted, it is necessary that 
the purpose for which it is to be used and its prepara- 
tion for that use should be planned. This point is cov- 
ered by the general application of the principle of 
Planning and Despatching. 

Where jigs, fixtures, dies, and other small tools are 
used, it is necessary that there should be efficient tool- 
room service. In a certain large plant the punch press 
department had a tool room, but no tool-room service. 
The first result was that the efficiency of use of space 
in the tool vault was very low, so that it was appar- 
ently full, though really containing much waste space. 
Consequently, dies were stowed in the work room, 
under the benches, and in every possible place. Because 
of difficulty of finding dies when they were wanted, and 
of the lack of advance attention to their condition, ma- 
chines were delayed excessively for set-ups. This de- 
creased the capacity of the shop and resulted in con- 
gestion of its floor space with work waiting. This fur- 
ther decreased the efficiency of the department and its 
capacity, and thereby increased the congestion. 

This is an example of the fact that inefficiencies act 
and react on each other, each to increase the gravity 
of all the rest. Conversely, if a little gain in efficiency 
can be made at one point it tends to improve others as 
well and to make all further progress easier. 

Division of labor usually requires that the care and 
maintenance of equipment should be entrusted, not to 
the men who run it, who should be specialists in oper- 
ating and should not be distracted from it, but to men 
having special skill in maintenance and repair work. 
This properly applies even to such matters as the care 
of belts and of small tools. 

Advance attention must also be given to the condi- 



ADAPTING CONDITIONS AND WORK 169 

tion of the equipment, so that trouble may be prevented 
instead of waiting for it to happen and then making 
repairs. 

In my personal experience as a sea-going engi- 
neer, anticipative inspection of ships' machinery as a 
means of preventing break-downs was familiar, and I 
have often wondered that managers ashore do not give 
more attention to it for that purpose. Apparently, the 
possible serious consequences of a break-down at sea 
caused marine engineers to adopt this practice in ad- 
vance of managers on shore. 

In Article 139 are mentioned card records which give 
the complete history of every piece of equipment of 
any importance. These records furnish the data on 
which to base anticipative inspection which, as Knoep- 
pel puts it, should be organized along the following 
lines : 

Each piece of equipment should be considered as a unit. 

As to each unit, the factors likely to cause trouble should 
be determined. 

Each unit should have a record card on which is recorded 
its complete history. 

For the various factors determined upon as requiring at- 
tention, limits as to time should be set for inspection pur- 
poses. 

Men should be delegated to look after this anticipative 
inspection. 

These inspectors should be supplied with inspection reports 
upon which to record their findings. These reports should 
be made out from the record cards covering the particular 
factors to be looked into, and sent to the inspectors. This 
would constitute an advance planning for this sort of work. 

The inspectors should take the inspection reports, make 
the inspections called for, note the conditions, advise as to 
troubles developing, and state what should be done, and 
when. 

These reports should be taken and the information con- 
tained thereon entered on the record cards. 



170 APPLYING EFFICIENCY PEINCIPLES 

Repairs to the units as made should be entered on the 
record cards, showing date and nature of work done. 

Because the time limits at the start will be more or less 
arbitrarily determined, it will be found as the work pro- 
gresses that many of them will need adjustment. For in- 
stance, a factor may have a time limit of eight days, when 
every five days will be found to be the best limit. Another 
might have one of four days and every two weeks would be 
found to be sufficient. Adjustment of limits is simply a mat- 
ter of analyzing the information shown on the record cards. 

Cost of repairs should also be entered on record cards. 



163. Routing. The financial importance of good 
routing varies greatly. In laying out a new plant it 
should, of course, be given careful attention ; but in an 
old plant the amount of actual money loss due to poor 
routing should be at least approximately determined 
before expensive re-arrangements are undertaken. 
For example, in a tannery all wet processes, like soak- 
ing, removal of hair and flesli, and washing, were lo- 
cated in the basement. Between steps of the wet pro- 
cesses occurred the dry operations of splitting, press- 
ing, and shaving, which also required better light than 
could be afforded in the basement. For these reasons 
these operations were located on the floor above. This 
necessitated the moving of the hides several times up 
one floor and back again to the basement. This was 
evidently inefficient, but on investigation was found 
to involve only a negligible money loss. The reason 
for this was that the plant was so small that the 
elevator man could do all the trucking involved. 
As his presence was necessary for other reasons, no 
appreciable sum of money could be saved by improv- 
ing the routing. Evidently if the business should in- 
crease so as to require a force of truckmen, this prob- 
lem would change ; and, in general, the bigger the busi- 



ADAPTING CONDITIONS AND WOEK 171 

ness, the greater the refinement that can profitably be 
effected in all details. 

The Ideals in designing the routing for a plant are 
stated by Goes as follows: 

1. Minimum transportation of material from the raw to 
the finished state. 

2. Proper relationship of all buildings with regard to the 
plant as a whole. 

3. Unity for future extensions : that is, if a plant be deter- 
mined whose departments are all properly located with re- 
spect to an ideal routing, then future expansions and future 
additions must preserve this same relationship. 

4. Maximum light and ventilation and proper sanitary ar- 
rangements. 

5. Economical development of entire property to its ulti- 
mate capacity. 

The amount of expense and trouble that is war- 
ranted in attaining these ideals depends largely upon 
the permanence of the enterprise. Many American 
plants are now engaged in work which, it is to be 
hoped, is only temporary. They are adapted for dis- 
tinctly other lines of work and expect as soon as pos- 
sible to return to them. Naturally the wise course for 
them is to make the best of such routing as they have 
for their present temporary work. 

The importance of the first ideal and the possibility 
of achieving it depend very much upon the character 
of the industry. Continuous processes on only a small 
variety of product, for example, sugar refineries, flour 
mills, steel-rail mills, packing houses, textile industries, 
cement mills, paper mills, wooden-box factories, and 
car-wheel and pipe foundries, offer the best chance for 
routing with minimum transportation; and in such in- 
dustries of considerable size, very excellent examples 
of it are to be found. Even in continuous processes a 



172 APPLYING EFFICIENCY PEINCIPLES 

marked difference in the conditions required by two 
successive operations may make transportation prefer- 
able to close sequence of location, as in the case of the 
small tannery above cited. 

At the other extreme are many industries that consist prin- 
cipally of assembling operations, little machinery being em- 
ployed, and that of small size, the entire business consisting 
of small self-contained production centers. Floor space is the 
principal requirement and, within limits, the building may be 
any shape. In some of these industries the density of the 
workers is almost the only limiting factor, so much so that 
legal restrictions are in force in many states to regulate the 
congestion possible in these callings.^ 

In the case of some assembling operations a marked 
change has recently developed. The prevailing prac- 
tice is to locate the assembly at a fixed point, to bring 
all the parts to that point, and there to assemble them 
by the labors of a very few workers. Automobile en- 
gineers have recently worked out much greater spe- 
cialization and division of labor by a radical change 
to what they call ''progressive assembly." In this 
the principal element of the assembly is started from a 
fixed point to follow a definite route along which are 
assembling stations. At every station highly special- 
ized workers add to the asembly only one or a very 
few parts. Very remarkable gains in efficiency and re- 
ductions of costs have been made by this method. It 
has been very highly developed by the Ford Motor 
Company, and many of its progressive assemblies are 
described in great detail by Arnold in ' ' Ford Methods 
and the Ford Shops." 

Evidently the fundamental gain by this method is 
that due to specialization, or division, of labor. 

Progressive assembly is coming into use to some ex- 

*^ Kimball, "Principles of Industrial Organization." 



ADAPTING CONDITIONS AND WOEK 173 

tent in foundries, as the construction of a mold is evi- 
dently an assembly; and the limits to the application 
of this method cannot yet be foreseen. 

It thus appears that in many cases of assembly, 
routing, instead of being a negligible factor, is one of 
the first importance and to be perfected to the utmost. 

Intermediate between continuous processes and 
usual practice in assembly operations, there are all 
degrees of importance of routing and of possibilities of 
perfecting it. Close to continuous processes are plants, 
like shoe factories, which carry on a continuous proc- 
ess, but one subject to continual change due to change 
of styles and complicated by working on a considerable 
variety of product; and near the other end are jobbing 
metal-working shops, in which good routing is desir- 
able, but very difficult to attain on account of the lack 
of repetition in the processes. 

In any case the following information is necessary 
in order to design correct routing : 

Complete list of operations in sequence; 
Necessary capacity at every operation in order to 

balance the equipment throughout; 

Number and size of machines necessary at every 

operation in order to attain the designed capacity ; 
Floor space needed about every machine ; 
Eequirements of every machine as to drive, illu- 
mination, ventilation, and safety; and 

Space needed for gangways, storage, inspection 

stations, and administrative offices. 

The possibility of solving the problem satisfactorily 
depends upon the existence of definite information on 
the above points. Often this is very difficult to obtain. 
When a problem of this kind comes up, the value of the 
file of service cards by machine numbers recommended 



174 APPLYING EFFICIENCY PRINCIPLES 

in Article 103, and of the schedules explained in Article 
108, is very great. In the absence of such records or 
equivalent the only way to get the information is to 
assemble the general knowledge contained in the memo- 
ries of the shop executives, make studies of the prog- 
ress of work through the plant, and then check the 
information derived from each source by that derived 
from the other. 

In a continuous process the design of the routing as 
a first approximation would consist in arranging the 
necessary machines and clear spaces in the order of 
sequence of operations within the limits imposed by the 
building site. The next step would be to modify the 
design so as to meet the needs for storage, power, 
light, ventilation, departmental organization, and 
safety; and to separate successive operations whose re- 
spective conditions conflict, as in the case of the tan- 
nery above cited. The flexibility of electric drive as to 
location, and its non-interference with light and ven- 
tilation, indicate its convenience in designing a plant 
lay-out. The reader is referred to Arnold's "Ford 
Methods and the Ford Shops" for a description of 
routing in a continuous process designed to practically 
ideal perfection. 

Where any considerable variety of product is made, 
especially in an intermittent process, the sequence of 
operations is apt to be so different for the different 
kinds of product that any arrangement of equipment 
on this basis must be a compromise, and often a very 
difficult one. On the other hand, the variation of the 
sequences makes it convenient to have machines that 
perform the same kind of work located together in 
order that workmen with special skill in their opera- 
tions may be kept with them. By this means, flexibility 



ADAPTING CONDITIONS AND WOBK 175 

of planning is obtained because, due to the similarity 
of the machines located together, any workman of that 
class can work with any machine and any machine and 
any man can be used on any article. This also tends to 
efficiency of supervision, since a foreman or straw boss 
has to manage only closely related operations situated 
near one another. When a sequence of operations is 
very difficult to arrange, these considerations lead to an 
almost complete abandonment of the attempt and to 
the arrangement of machines in groups according to 
their siniilarity, with usually a little general service 
equipment, like drill presses, emery wheels, and vise 
benches, attached to every group. In this case, effi- 
ciency of movement of materials, which will probably 
not be attained anyway, is deliberately sacrificed to 
obtain the assured efficiency due to flexibility of plan- 
ning and to specialization of labor and of supervision. 

164. Accurate knowledge of physical quantities m- 
volved in the process. One still finds temperatures, 
humidities and other such quantities left to the un- 
aided judgment of the workman on the job. This 
sort of thing leads to uncertainty as to the results of 
processes and to unreliable product. The remedy is, 
of course, the measuring of such quantities by instru- 
ments, so that physical quantities determining proc- 
esses can be controlled to standard amounts in the 
light of exact knowledge. The use of automatic record- 
ing instruments for this purpose has additional advan- 
tages, as stated in Article 106. 

165. Readiness of personnel for se'*'vice, when and 
where wanted. A very few concerns are applying to 
their personnel the anticipative inspection of ''regu- 
lar, systematic periodic physical examination of the 
entire body, such as is applied to ordinary machinery. ' ' 



176 APPLYING EFFICIENCY PRINCIPLES 

This inspection is followed up by advice, instruction, 
and treatment as the need appears, in order *'to raise 
the general level of fitness, well being, and efficiency. ' ' 
This work is done by a medical staff. 

Aside from such anticipative inspection and treat- 
ment this adaptation follows naturally from the appli- 
cation of the principles of Personnel, Organization, 
Fair Deal, Discipline, and Planning and Despatching, 
and does not require further discussion at this point. 

166. Division of labor. Time studies, or even casual 
observation, in most plants will show that any skilled 
worker is performing not only his skilled operations, 
but also others, like trucking, sorting and arranging 
materials, lifting weights, and so on, which can just as 
well be done by unskilled labor. In such a case, the 
efficiency is low because part of the work is done by 
higher priced labor than is necessary. 

In order to improve the efficiency, it is necessary that 
the unskilled operations should be separated from the 
skilled, and that each should be assigned to workers of 
the proper class. This results in Division of Labor. 

The worker on each class of operations then becomes 
a specialist in a narrower field than before and goes on 
to develop the higher skill due to that closer speciali- 
zation, so that Division of Labor further increases its 
efficiency. 

In order to obtain this increase of efficiency, it is 
often profitable to separate operations that are equally 
skilled, so as to obtain the benefit of closer specializa- 
tion on all of them. 

On the other hand division of labor increases the 
dependence of every worker on the service of others 
and, if this service is required very irregularly, the 
difficulty of providing it reliably without having some 



ADAPTING CONDITIONS AND WOBK 177 

of the workers wait in idleness between times, may be 
so great that division of labor may be impracticable. 

Confining our attention to the considerable number 
of operations, in which division of labor is practicable, 
it is apparent that in every case it increases the amount 
of handling of the material, and the monotony of the 
occupation. Monotony increases fatigue and thereby 
lowers efficiency. Hence division of labor is not with- 
out its losses, and if it is pushed too far, the losses may 
overbalance the gains. 

TABLE 6. TIME STUDY IN A PXIRNITUBE FACTOET 

Order 2342 Article— 1231 

Operation — Cross cutting (stock sawing) 

r 39 per cent. Sound wormy No. 1 
Material — Chestnut \ 56 per cent. " " No. 2 

[ 5 per cent. Culls. 

100 per cent. 
Dimensions of lumber — 14 ft. X 9 in. average, X 1 inch 
Parts — Back rails, end rails, inside rails, inside facings, 
center rails, center drawer fronts, back rails 
Machine — Cross cut saw 82 
Workman— 298, Wutt 

Time (minutes) Remarks 

Operation ,■ -» ^ Time as given per board 

Actual St'd for main cycle only 

1. Walk to pile of boards 066 .06 Standard assumes lumber 

2. Pick up board 07 .036 on truck located near 

3. Return to saw with board. .07 .072 machine from which saw- 

4. Place board on table of saw .011 .011 yer can pick up board at 

5. Saw board 134 .134 its middle, instead of 

dragging it endwise off 
the pile 

6. Throw kindling off saw 

table into barrel 021 .015 Kindling saved and sold 

7. Handle and inspect board . .406 .406 as by-product 

8. Measure board Inappreciable 

9. Assemble cross-cut pieces 

on table of saw 057 .057 

10. WaUc to cross-cut piles 133 .089 Standard assumes cross- 

11. Place cross-cut pieces on cut piles more conven- 
piles 16 .16 iently located, as is possi- 

12. Walk to saw from cross-cut ble 

piles 033 .03 Average total for 11 

boards separately ob- 

Total main cycle 1 . 141 1 .07 served = 1 .09 



178 



APPLYING EFFICIENCY PBINCIPLES 



In any proposed Hivision of labor, the question there- 
fore arises as to how the operations should be divided 
and whether the division will pay. This question can 
be answered by means of a time study which, in case of 
minute sub-division, will have to be a time-motion 
study. Table 6 gives a time study made for this pur- 
pose in a furniture factory. 



TABLE 6. TIME STUDY IN A PUBNITUEE FACTORY (CONTINUED) 

Orders 364, 365, 376 

Article— 487 

Operation — Cross-Cutting (Stock sawing) 

Material — Chestnut, Sound Wormy, No. 1 

Dimensions of Lumber — 10 ft. X 7 .9 in. average, X 1 . in* 

Total linear ft. original = 2935 
Machine — Cross-Cut Saw, 82 
Workman— 298, Wutt 
Part — Panel and top cores 

Time (minutes) Remarks 

Operation , » » Overall Operation 

Actual St'd 

Take off apron 4 .4 

Oil saw 31 .31 

Dust saw table. , 57 .57 

Cross-cut 85 boards .... 

22 @ 1 . 288 in 28 . 34 minutes 
21 @ 1.19 in 25. 

23 @ 1.436 in 33.08 " 
4 @ 1.04 in 4.16 " 
4 @ 1.808 in 7.23 " 

11 ©1.423 in 15.65 

85 ©1.335 in 113.46 " 113.46 81. Standard - .951 X 85. 

(.951 is estimated from 

Mark pieces for benefit of later study of the main cycle, 

operations 59 .59 allowing for difference in 

Read job order 16 .16 length of boards. This al- 

Talk to rip sawyer 98 .00 lowance was based on a 

Under instruction of Foreman . .21 .21 number of other studies 

of cross cutting) 

At toilet 2 .69 \ q o^q / 10 per cent, of total time 

Eat 78 / ^-"^^^ \ allowed for rest 

Delayed by rip sawyer getting 

in the way 1.23 .00 

!By addition of stop 

watch items above 121 .38 \ qo ^q -r.,. „ jj:+Jo« 

By standard watch.... 122.28/ ^^'^^ By addition 



ADAPTING CONDITIONS AND WORK 



179 



By providing tlie cross-cut sawyer with a helper to 
do the unskilled work these standards are attainable : 



STANDARD OPERATION OR CORRECT METHOD 



Main cycle 



Sawyer 



Time 
(Min.) 



Place board on saw table ... .011 
Handle and inspect board. . . . 406 
Measure board (inapprecia- 
ble) 000 

Saw board 134 

Throw kindling into barrel . . .015 
Assemble cross-cut pieces on 
table of saw 057 



Time 
Helper (Min.) 

Walk to pile of boards 06 

Pick up board 036 

Return to saw with board . . . .072 

Wait for sawyer 165 

Place board on saw table ... .011 

Walk to cross-cut piles 089 

Place cross-cut pieces on 

piles 16 

Walk to saw from cross-cut 
piles 03 



Total 623 Total. 

Overall Operation 



.623 



Cross cut 85 boards 53 . 



Auxiliary operations 1 .67 

Rest 6.07 



Provide 85 boards and carry 
away cross-cut pieces from 

same 53. 

Dust saw table 57 

Wait for sawyer 1.1 

Rest 6.07 



Total 60.74 



Total 60.74 



The above indicates that standard times for a cross-cut sawyer with 
helper can be reduced to 60 .74 -h 92 .40 = 66 per cent, of standard times 
now set for a cross-cut sawyer working alone. 

Comparison of Cross-Cut Sawyer Working Alone with Cross-Cut 
Sawyer with Helper, Based on 100 Standard Hours of Cross-Cut Sawyer 
working Alone. 



Sawyer Alone at 100 per cent 
Efficiency 

Total hours 100 

Wages to Sawyer @ .25. .. .$25 .00 

Bonus to Sawyer 4.17 

Total wages and bonus. . . 29 . 17 
Burden on machine 

$.40 X 100 40.00 

Burden on labor 

$25. X .65 16.25 



Sawyer and Helper at 100 per cent 
EflSciency 

Total hours 66 

Wages to Sawyer @ .25 $16 .50 

Wages to Helper @ .185. . . 12.20 
Bonus to Sawyer 4 .71 



Total wages and bonus. . . 33 .41 
Burden on machine 

$.40 X 66 26.04 

Burden on labor 

$28.70 X .65 18.68 



Total cost $85 .42 



Total cost $78.49 



180 APPLYING EFFICIENCY PRINCIPLES 

In order to reach a decision, it is necessary first to 
determine the proper standard time for the sawyer 
alone ; then to determine the Correct Method, or Stand- 
ardized Operation, for the stock sawyer and helper 
working together ; and then to determine the standard 
time for the two working together. It can be as- 
sumed that, as the general application of the Principles 
of Efficiency takes effect throughout the plant, actual 
time on the operation will, on the average, equal the 
standard time. The standard times determined then 
furnish a basis for estimating the cost of the opera- 
tions by either method of working. 

It will be noticed that the total cost of wages and 
bonus is increased by the proposed division of labor; 
but that, when burdens are included, the total cost is 
reduced by the division. The reality of saving on the 
burden would probably depend on whether there was 
work enough to occupy both sawyer and helper to full 
capacity. If there were, so that output would be in- 
creased by employing the helper, the overhead would 
be carried by a larger volume of product, and there 
would be a real saving in burden. If the output could 
not be increased, the saving in burden would probably 
be fictitious. This indicates that the division of labor 
should be practiced if the plant were working at full 
capacity; that the profit of the division would de- 
crease as volume of production fell off; and that, if 
the plant were working at or below 66 per cent of ca- 
pacity, it would be more profitable to use the sawyer 
without a helper. 

In other words, if the plant were working 60 hours 
a week at full capacity, it would pay to divide the 
cross-cutting operation by giving the sawyer a helper ; 
but if production should fall off to the capacity of a 



ADAPTING CONDITIONS AND WORK 181 

full crew at 40 hours per week, it would be cheaper to 
run 60 hours and let the helper go, than it would be to 
keep him and run 40 hours, unless a material reduc- 
tion of overhead expenses could be effected by work- 
ing the fewer hours. See also Article 159. 

In general, of course, division of labor can not be 
carried far where there is either a small volume of 
work or a large variety of work, because it funda- 
mentally requires a sufficient amount of repetition so 
that a worker's whole time can be employed in a ngtr- 
row specialty. 

167. Safety of employees. In the matter of minor 
injuries to operators, a punch pressi without safe- 
guards is one of the worst machines there is. The last 
few years have seen the fitting of safety devices to 
most of these, in common with other machines. I 
have never seen a punch-press safety device which did 
not add one or more motions to the main cycle of opera- 
tions and therefore require an increase in the stand- 
ard time for the job. Nevertheless, experience shows 
that the production of punch presses does not fall oft 
permanently from the addition of safety devices. 

What is the explanation of this apparent paradox? 

In the days of unguarded punch presses, a man 
would take a job as an operator and would not work 
long before he or a shop mate would lose a finger. A 
little of that usually sickened him of punch-press work 
and he would hunt for another job. If he was fortu- 
nate, that was the last of punch-press work for him; 
if not, he might come back to it under compulsion, only 
to leave it again as soon as he had a little money ahead 
or another accident had frightened him. 

The result of this was that the only permanent 
punch-press hands were a low class of men who from 



182 APPLYING EFFICIENCY PRINCIPLES 

some defect, mental, moral or physical, were unable to 
rise above tbat kind of work; and they had the low 
efficiency inevitable to men of that kind. With the 
great decrease of danger, a corresponding improve- 
ment has taken place in the quality and efficiency of 
the operators. The new and efficient man does the 
work, including the operation of the safety device, in 
no longer time than the old inefficient man required, 
without that loss of time. 

This is a concrete illustration of the fact established 
by general experience, that it pays to afford all rea- 
sonable protection to workers. The importance of a 
permanent personnel, which comes up again and again 
in these articles, is a sufficient reason for guarding 
against change by accident or sickness. See Article 
159, Table 5. 

Faurote lists the following principal causes of ac- 
cidents : 

1. Defective structures. 

2. Defective machinery. 

3. Insufficient room, 

4. Absence of safe-guards. 

5. Uncleanly conditions. 

6. Insufficient light. 

7. Lack of good air. 

8. Unsuitable clothing. 

9. Carelessness. 

10. Bad mental condition of workmen. 

11. Ignorance. 

12. Lack of co-operation. 

Except absence of safe-guards and unsuitable cloth- 
ing, these all require attention in other connections 
also in any effort for increased efficiency ; for example, 
insufficient room comes up for attention in the design 
of the necessary clear spaces in solving the routing 
problem. 



ADAPTING CONDITIONS AND WOEK 183 

Bad mental condition of the workmen is to a con- 
siderable extent removed by the application of the 
principles of Personnel, Fair Deal and Efficiency Re- 
ward, as will be seen by reference to the chapters on 
those principles. Besides this, one's mental condi- 
tion is greatly influenced by the conditions under which 
he works, especially by warmth, light, and ventilation. 

Closely related to protection against accident, is pro- 
tection against infection. The latter requires cleanli- 
ness, good light and ventilation, a sanitary supply of 
drinking water, and the prompt treatment of all 
wounds, no matter how slight. Other measures like 
the detection and elimination of infected persons, may 
be necessary under special circumstances; but these 
are usually taken care of by the local Board of Health. 
See also Article 165. 

All workers should be positively required to report 
to some designated person for first aid immediately on 
receiving even a scratch, in order to avoid the danger 
of infection. The common practice of administering 
first aid at the same place where applicants for work 
are received, either the foreman's or the superintend- 
ent's office, should be discontinued. The sight of blood 
and first aid applications is distinctly discouraging to 
an applicant for v/ork, and may scare away a desirable 
employee. Concerns of any size commonly employ a 
nurse and provide a first aid room and seem to find the 
practice profitable. 

168. Ventilation. Tests and universal experience 
have clearly shown that one's power falls off with 
fatigue. The general relation between working time 
and working power is shown in Figure 5. It goes with- 
out saying that a tired worker can not attain a high 
standard of performance. 



184 APPLYING EFFICIENCY PRINCIPLES 

The characteristic effects of fatigue are produced 
by poisons deposited in the blood by the tissues broken 
down by work. These poisons are eliminated by oxi- 
dation in the lungs. Hence any deficiency in the sup- 
ply of fresh air hastens fatigue and thereby lowers 
efficiency. 

Fortunately window ventilation is practicable in a 
temperate climate during a large part of the year, and 
the workers themselves generally leave the windows 
open and get plenty of air at such seasons; but in 
winter the ventilation of work rooms, especially if they 
are at all densely inhabited, is often bad. 

It has been abundantly demonstrated that good ven- 
tilation pays, but in the absence of artificial methods 
for use in cold weather, much more than is usual can 
be accomplished by window ventilation. Some atten- 
tion to the matter and to the direction and force of the 
wind will usually find a means of changing the air in a 
room, admitting sufficient fresh air and at the same 
time so diffusing it that there will be no objectionable 
draft. However, success in this is not to be expected 
without some Instruction of foremen and other shop 
executives, and of the workers themselves. 

Beside ventilation for breathing purposes, machines 
which throw off finely divided matter, like dust or fine 
grit, and processes which give off poisonous fumes like 
carbon bisulphide from some cleaning processes, should 
be covered with exhaust hoods through which the ob- 
jectionable matter is sucked away and discharged 
where it will be harmless. This practice is so general 
that it probably requires no further comment, and it 
is required by law in many states. 

169. Lighting. If any one wants to get a quantitive 
measure of the value of good illumination, let him make 



ADAPTING CONDITIONS AND WORK 185 

two time studies, one in good illumination and the 
other in poor illumination with all the other condi- 
tions the same. The results will be sufficiently convinc- 
ing as to the value of light. 

The Ideal in illumination is uniformly diffused light, 
sufficient for clear vision without eye strain, but free 
from glare. 

The attainment of these ideals with maximum effi- 
ciency well repays the competent counsel of an illu- 
minating expert, and can not be adequately treated in 
any other way. 

Even without advice, one can guard against such sins 
as low hung incandescent lights in plain bulbs, in some 
places blinding the eyes of the workers with an intense 
direct glare, and at others making any refinement of 
measurement or of work impossible by throwing con- 
flicting shadows across the object of vision, from what- 
ever angle it is viewed. 

It has also proved true that where an adequate supply of 
natural light is brought into service, men work more safely 
and cheerfully than where the best artificial light is employed. 
When new buildings are under construction, usually no extra 
expense is involved in providing sufficient window space.^ 

Freedom from glare with adequate illumination by 
natural light, gives the preference in the northern 
hemisphere to north light from a high angle, leading 
naturally to saw-tooth roofs where that construction is 
practicable. Ribbed glass offers the best solution of 
the problem on other than north exposures. 

Permanence of good natural illumination requires 
that the windows should be kept clean. This means 
some expense, but it is cheaper to clean the windows 
than to do extra work occasioned by semi-darkness. 

»N. F. A. Safety BuUetin. 



186 APPLYING EFFICIENCY PEINCIPLES 

Beside illumination of working places, safety re- 
quires that halls, entries, and passages, especially the 
top and bottom of stairways, should be lighted; but 
only enough light for men to see their way about is 
needed in these places, and that is considerably less 
than would be required for work. 

170. Warmth. The necessity for sufficient warmth 
to safeguard health and to enable workers to use their 
fingers efficiently is so obvious as not to require dis- 
cussion. If I may judge from my own observation, 
American plants are sufficiently heated except in the 
most extreme winter weather. Usually it does not pay 
to go to much expense to remedy a condition which 
occurs only seldom. 

It may be well to point out, in passing, that a steam- 
power plant, exhausting into the heating system, can 
give both power and heat at a very low cost. 

171. Safety, Ventilation, Light and Warmth. Goes 
sums up the situation with reference to these four con- 
ditions as follows : 

The most able administrator, with the most efficient scheme 
of management, is tremendously handicapped by the physical 
characteristics of poorly arranged, poorly lighted, badly venti- 
lated and carelessly sanitized buildings. 

In reality there is no excuse now for poorly lighted build- 
ings, old or new. There is sufficient evidence at hand to prove 
that pure air and unretarded sunlight increase working effi- 
ciency. Operatives who can see Avell, work more accurately, 
spoil less material, work surer and faster. If furnished with 
good light and air, they have more reserve energy. In most 
cases, the attendance is better and more constant where the 
workers have good, clean, pleasant and congenial surround- 
ings. They work 54 or 60 hours a week, as the case may be, 
and appreciate good sanitary facilities and pleasant sur- 
roundings. 

There are factories where the light is so bad, ventilation 
so atrocious, sanitary arrangements so villainous, that it is 



ADAPTING CONDITIONS AND WORK 187 

impossible to understand how their employees are retained 
at all. On inquiry it will be found -that they do not retain 
them for any len^h of time — ^that is, good ones. Any man 
or woman who has red blood in his or her veins would leave 
• — they cannot stand it — their self-respect will not tolerate it. 
The class that stays does not .have the sense or energy to leave 
and are not worth having at any price. The output per 
operative would be ridiculously small compared with stand- 
ard conditions. 

We are beginning to realize the effect of these things not 
only on the industrial plant, but on the community itself. 
We cannot afford to breed eye troubles, tuberculosis, etc., in 
factories simply from lack of proper conditions. Society 
cannot tolerate it. 

Mr. Kimball in his "Principles of Industrial Organization," 
says, "It is impossible to overestimate the value of abundant 
light, heat and ventilation. These things were looked upon 
in former days only as luxuries, and the cold, dark, bad smell- 
ing shops so common a few years ago were in most cases mis- 
taken efforts in economy. It is true that modern building 
construction has made the lighting of factories a compara- 
tively easy matter, but it is important that it be kept in mind 
that light, heat and ventilation pay dividends. 

"In times past great care was taken that clerks on small 
salaries were comfortably housed and they would not have 
been expected to do good work unless so cared for, while 
the high-priced mechanics were too often expected to pro- 
duce good results in spite of«all sorts of physical discomfort 
and inconvenience. There is no difference between the psy- 
chology of office and of shop. Workmen can naturally pro- 
duce more and better work in well ventilated and well-lighted 
rooms, and while this would naturally be accomplished by 
improved physical surroundings alone, it is largely added to 
by the consequent improved mental outlook." 

A certain motor-car company in the Middle West noting 
the changed conditions of the new plant over the old, states : 
' ' After operating in our new plant for several weeks, we find 
that the improved working conditions have so increased the 
efficiency of our labor as to enable us to reduce our working 
day from 10 to 9 hours without diminishing the pro rata 
amount of production." 

Similar instances could be given for almost every industry 
that has either constructed a new plant or rehabilitated an 
old one. 



188 APPLYING EFFICIENCY PBINCIPLES 

172. Work height. Two quotations from Arnold's 
articles on **Ford Methods and the Ford Shops" will 
suffice for this important condition. He says : 

In all instances it is of first importance that the workman 
should stand (or sit) upright. A stooping posture very 
soon tires the workman and greatly reduces his efficiency. 
The Ford engineers attach so much importance to this "work 
high" condition that they are now placing a great number 
of gray-iron raising bases under various machine tools, par- 
ticularly under presses, to bring the work at such a height 
that the workman can either stand or sit erect, any stoop 
being now well known to cause a marked reduction in the 
worker's output. 

173. Suitable hours of work and periods of rest. 
Four thousand or more years ago, the experience of 
employers in Babylon taught them that their workers 
did more in seven days by working six and resting 
one, than they did by working every day. The insti- 
tution of one day's rest in seven became so firmly im- 
bedded in Semitic industrial tradition, that Moses in- 
corporated it in the Ten Commandments, and gave it 
the sanctity of religion. 

'Thanks to Moses, the occidental industrial world re- 
ceived the tradition ready made and rested one day in 
seven. China never learned the lesson and has worked 
seven days a week. I suspect that the progress of the 
Sabbath-keeping nations, and the stagnation of the 
ever working nation, is more than a coincidence ; that 
the Chinese, by refusing to stop work one day a week 
and get the fatigue poisons out of their blood, de- 
stroyed their capacity for original thought and conse- 
quently for progress, just as it would become impossi- 
ble to keep up steam, if the stoke hold were never 
cleared of ashes. 



ADAPTING CONDITIONS AND WORK 189 

At the beginning of the industrial revolution due to 
the invention of machinery, factory owners worked 
their employees always for long hours and sometimes 
for sixteen hours a day, probably in imitation of the 
hours of agricultural laborers of the period ; but work 
in factories was so much less healthful than work in 
the open fields, that factory workers visibly deterio- 
rated under the conditions and the bad effects on the 
industrial population .became so apparent that there 
has been a slow and reluctant, but continual, reduction 
of the hours of work. Thus far experience has justi- 
fied these reductions by increase, instead of the 
dreaded reduction, of output. If any one knows ex- 
actly what hours of work will give the greatest output 
per worker under any given conditions, he ought to 
speak out for the benefit of the world. See Article 217. 
It is to be noted, however, that there is no general 
movement by employers for a return to former long 
hours. 

Short periods of rest distributed through the body 
of working hours, also increase efficiency, varying 
greatly according to the particular circumstances. 

The low wages for which women work and their 
greater fitness for operations requiring deftness, clean- 
liness or delicate finger work, indicate the efficiency of 
using them for the work for which they are peculiarly 
suited. However, the employer of women who desires 
to attain maximum efficiency must recognize the dis- 
abilities to which they are subject and must treat them 
accordingly. Care of women workers, adequate heat, 
light, ventilation, and sanitation of their work places 
will decrease the effects of these disabilities. Women 
require more rest than men, and while a man can rest 
on a pile of boards and in the presence of his fellows, 



190 APPLYING EFFICIENCY PEINCIPLES 

women often require comfort, quiet, and privacy for 
adequate rest. Progressive concerns which employ 
large numbers of women are realizing more and more 
the necessity of providing rest rooms for their special 
use, in many cases accompanied by the continual ser- 
vice of a nurse or other woman attendant. The grad- 
ual increase of installations of this kind indicates that 
those jwho have tried them find that they pay. 

The whole matter has so close a relation to the de- 
termination of Standards that further discussion of it 
is given in the chapter on that principle, Article 216. 

174. Suitable materials. Some discussion of this 
condition is given in Chapters III and XVIII, Higher 
Common Sense and Selection of the Point of Attack. 

The amount of money paid out for materials is shown 
by the accounts, and is therefore fully appreciated by 
the management. The costs occasioned by defective 
and unsuitable materials can be determined only ap- 
proximately and with difficulty, so the natural tend- 
ency is to buy cheap materials. They may also be 
the cheapest in ultimate cost ; but the chances are that 
they will not be. 

The best way to guard against losses from unfit ma- 
terials is to determine what qualities are needed for 
maximum efficiency, to express those requirements in 
written specifications, and to enforce the specifications 
by inspection. Of course materials of minor impor- 
tance would probably not repay this expense; but it 
is certainly warranted in the case of materials which 
are used in large quantities and of those which, though 
used in small quantities, may, like lubricating oil, have 
an important effect on the efficiency of the whole plant. 
The preparation of specifications is a part of the de- 
termination of Standards. 



ADAPTING CONDITIONS AND WOKK 191 

Not only is the quality of raw materials important, 
but also the quality and condition of worked materials 
as the latter pass from operation to operation. Very 
great loss may be caused by allowing wrongly worked 
or damaged parts to pass along and have more work 
put on them before they are detected. At the best 
this leads to excessive cost for making good the dam- 
age, and sometimes leads to scrapping the entire arti- 
cle in an advanced state of manufacture. Here again 
the remedy is prompt and efficient inspection. 

175. Clean, orderly and properly arranged storage. 
Standardized location of stores. This condition hardly 
needs discussion or even explanation. One might think 
that it did not require even mention, if he had not seen 
the astonishing violations of it in actual practice. 

176. Prompt and accurate inspection. Morse says: 

Products should be bought as far as possible according to 
specifications agreed to by all parties interested, including 
the Purchasing Agent, and they should be inspected by men 
independent of all parties interested. The use of standard 
specifications is comparatively common, the proper following 
up of these specifications by intelligent inspection compara- 
tively rare. Such being the case it is unfortunately true that 
the bidder on high-class product is at a distinct disadvantage. 
This is not a theoretical statement, but a hard fact, which 
is causing many efficient manufacturers of high-class product 
serious concern. 

Is the Purchasing Agent an unbiassed judge of the quality 
of product? No. Unless inspection is independent and com- 
petent as outlined above, he is only mildly interested in the 
quality of the product. 

This statement is made in a tolerant spirit. Purchasing 
Agents are human. Their success is measured by the money 
which they save. Bids on the more important purchases are 
scanned by an executive and old prices are compared with 
new. Money is a tangible measure of success, while depart- 
mental complaints in general terms are only a negative proof 
of failure. 



192 APPLYII^G EFFICIENCY PEIKCIPLES 

In accordance with these requirements, the inspec- 
tion department is represented in the Diagram of Or- 
ganization, Figure 1, and in the discussion of Organi- 
zation, as under no line authority helow that of Gen- 
eral Manager — the chain of command running. General 
Manager, Chief of Staff, Chief Inspector, Inspector. 

The inspectors of work in progress have two impor- 
tant functions: to prevent damage, and to determine 
the amount of product for which the worker is entitled 
to credit, and which is fit to pass on to the next opera- 
tion. 

In order to perform the first function, the inspector 
must see the job promptly at the beginning of work. 
The foreman very commonly performs this function, 
and there is no objection to his doing so, provided he 
is sufficiently free from other duties and is otherwise 
qualified to do it efficiently. This of course calls for 
an obvious modification of the organization. 

If the despatch board is used, as explained in Chap- 
ter VII on Planning and Despatching, the cards in the 
stand-by pockets show the inspector just where his 
attention will be required for this purpose, while the 
two copies left at the despatch board, of the cards 
actually in work, show him approximately when it will 
be wanted. If it is not desirable that the inspector 
should look through the pockets of the despatch board, 
the despatcher can do that and make out separate or- 
ders to the inspector, what he is to inspect and when. 

The determination of the number of pieces for which 
the worker is to be credited involves making a record 
of rejections, and this is discussed in Article 121. 

It is desirable that inspection should be made imme- 
diately upon the completion of the work, and that the 
parts should pass on at once to the next operation; 



ADAPTING CONDITIONS AND WORK 193 

but this may not always be possible, and is sure not 
to be if the inspector requires considerable bulky or 
heavy equipment for the proper performance of his 
work. In the latter case there must be an inspection 
station easily accessible to the work places, and the 
work must be delivered there as soon as possible after 
the completion of work on it. 

If inspection at the work place and immediately at 
the completion of the operation is practicable, it may 
be planned and despatched similarly to the other in- 
spection. If the work has to go to an inspection sta- 
tion, the ultimate ideal should be that inspection would 
be planned and despatched the same as any other oper- 
ation; but my own experience is that it is trouble- 
some to get this going and that the installation of de- 
partmental planning and despatching ought not to 
wait for it. 

In order to get departmental planning and despatch- 
ing going, the planning sub-principle of the Reservoir 
(See Article 123) may be applied to the inspection sta- 
tion. The departmental planning then takes up the 
work every time the inspection station finishes with it 
and plans it on to the next time it has to go there, at 
which point the departmental planner drops it from his 
plans until it again emerges from the inspection sta- 
tion. Even at the outset, the departmental planners 
should indicate to the inspection station the order in 
which work is wanted from it. As long as the matter 
is being handled in this way, the central planning office 
must leave corresponding discretion to the depart- 
mental planners. 

In some cases every piece must be inspected, if bad 
work is to be effectively prevented from passing on. 
The problem of inspection is then very difficult If the 



194 APPLYING EFFICIENCY PRINCIPLES 

work will bear the cost, a sufficient inspection force 
may be provided to examine every piece; otherwise 
about the only suggestion of general character that 
can be made is that workers may be offered a small 
bonus for discovering and rejecting faulty pieces that 
come to them. The inspection then becomes a by- 
product of the direct work of people who have to han- 
dle every piece. Usually if this plan is followed, the 
rejections by direct workers ought to be passed upon 
by an inspector, and the latter 's approval ought to be 
necessary to make the rejection valid. The inspector 
ought then to make out the record of rejection, for 
which see Article 121. 

177. Supply of material when and where wanted. 
Where the problem of routing has been very well 
solved, so that operations are located in their proper 
sequence, and successive operations near one another, 
the workers may simply hand the materials along from 
one to another; and a very small trucking force may 
move the work, as it is completed, from the last opera- 
tion of one department to the first operation of the 
next. 

In some cases where large amounts of material are 
handled in this way, it has been found profitable to 
provide smooth rails or ways, along which the material 
can be pushed, with a minimum of labor to the next 
operation. In some cases this labor can be further re- 
duced by providing smooth slides, inclined at slightly 
more than the angle of friction of the material. By 
raising the material very slightly above the working 
level, the delivering operator places it in the upper end 
of the slide, whence it is carried by gravity to the per- 
son who receives it. This method is, of course, limited 
to materials of which the units are neither very heavy 



ADAPTING CONDITIONS AND WOEK 195 

nor easily injured. In extreme cases and those in which 
the time of every operation has been very closely de- 
termined, the materials may be moved past successive 
operators on some form of power-driven conveyer, 
every operator doing his own work as the material 
passes him. In intermediate cases, the material may 
be set on a runway in which rollers are mounted. Each 
worker then easily shoves the material along the run- 
way to the next. This is especially convenient if the 
operations are such that they can be performed with- 
out removing the work from the runway. A slight 
downward pitch of the runway in the direction of 
travel will often make movement still easier. These 
methods have been worked out in great refinement in 
the Ford plant. 

In any case there is the possibility of considerable 
labor saving in the movement of materials by up-to- 
date equipment, most of which is probably too familiar 
to require even mention. In my own experience I have 
noticed a lack of appreciation by plant managers of 
those forms of trucks which permit of unloading in 
mass, without disturbing the load, and without the 
necessity for handling the units of the load in detail. 

Where the routing is less perfect, the movement of 
materials must receive the attention of the planning 
department, and in any case this must be given to the 
initial movement of materials from the store rooms to 
work rooms, and to the movement of dies, jigs, fix- 
tures, and other tools, from tool rooms to machines 
and back again. These matters are discussed in the 
chapter on Planning and Despatching, except the move- 
ment of material from operation to operation. Here 
again the despatch board gives advance notice of what 
is wanted; and the move-man, or boss trucker, may 



196 APPLYING EFFICIENCY PEINCIPLES 

either consult the despatch board directly or, if that 
is not advisable, the despatcher can consult the board 
and make out the necessary move orders. 

An intermediate case occurs where the movement is 
too complicated to be reduced to a simple flow from 
operator to operator, but still is so simple that the 
move-man can readily learn it by rote. All that is 
necessary then is for the move-man to learn the rout- 
ing, and move the materials finished at one operation 
immediately on to the next. 

It has been found that direct workers lose a great 
deal of time if the work comes to them in an unadapted 
condition, as when a man has to pick out successive 
pieces of work from a tangled or disorderly pile, or 
where parts which have to go to a machine in a cer- 
tain way are received hit or miss by the operator so 
that he has to turn them over or around, before enter- 
ing them in the machine ; and that the direct workers 
also lose a great deal of time if they have to hunt 
around for a place to deposit their finished pieces. 
Sometimes automatic arranging or sorting machines 
may be used to adapt the condition in which the work 
goes to the operator ; and in the Ford plant, the work 
slides enable many operators to drop their finished 
work from the hand at a standard point, without any 
thought. If these methods are not practicable, divi- 
sion of labor can often be applied, at least to adapt- 
ing the condition of the work as received. The work 
of adaptation can then be separated from the main 
operation, and the former may be assigned to cheaper 
workers, one of whom can probably serve several oper- 
ators. 

178. Beside the general conditions which are listed 
above, every industry, every plant, every department 



ADAPTING CONDITIONS AND WORK 197 

and every operation has peculiar conditions of its own. 
The means of investigating these are the same as those 
stated in Articles 151, 152 and 153, for the investiga- 
tion of conditions in general. 

179. In connection with operations there are many- 
minor unadapted conditions which in the aggregate 
cause a great deal of loss. For example, see Table 6, 
Article 166, "Remarks" Column, opposite operations 
1, 2, 3 and 10. It is safe to say that if the sawyer 
were put on standard time for the operation and re- 
ceived an Efficiency Reward for approximating the 
standard, he would himself adapt the conditions there 
noted. When betterment begins, the attention of the 
efficiency staff is necessarily limited to the big things ; 
and it is important that the workers should be used in 
this way to adapt minor conditions, by installing stand- 
ards and starting efficiency reward as soon as possible. 
However, see Article 310 as to the proper time to start 
Efficiency Reward. Minor conditions should have the 
attention of the efficiency staff as soon as more impor- 
tant matters are out of the way, for experience has 
shown that the direct workers themselves will very 
seldom accomplish thorough adaptation. 

180. About twenty years ago, a technical paper was 
published in which the author bemoaned standardiza- 
tion as the death knell of progress. As we look back 
over the time, his fears seem somewhat amusing. If 
one concern had a monopoly, it might achieve standard- 
ization, allow it to degenerate into stagnation, and re- 
fuse to make further progress. Sometimes a concern 
does that, whereupon mortification sets in, and in due 
time the remains are buried. Meanwhile the world of 
industry moves on, making of adaptation not an obsta- 
cle to, but an instrument of, progress. 



Chapter X 
STAND AEDS 

181. 

ON the China coast twenty years ago, in the absence 
of any Chinese coinage except the valueless 
''cash," money of all countries circulated and was so 
mixed with counterfeits and clipped and plugged coins, 
that every business house of any importance kept an 
expert judge of money called the ''shrof " and would 
accept no money until it had been passed by him. When 
the shrof passed a coin, he stamped his mark on it and 
minor traders judged of the value of coins by their 
shrof marks. Every financial transaction of impor- 
tance required the services of the shrof with his expert 
judgment, and weighing and stamping of all money 
that changed hands. Think of the clumsiness and in- 
efficiency of such methods compared with those to 
which w^e are accustomed! We little realize that 
William III delivered the English-speaking peoples 
from similar inefficiencies in dealing with their debased 
and clipped currency by appointing Sir Isaac Newton a 
seventeenth century Scientific Manager of the mints of 
the realm; and that, to the latter 's determination of 
accurate standards of the coin and his institution of 
milled edges in order that any alteration of these stand- 
ards in circulation might be easily detected, we owe the 

198 



STANDAKDS 199 

result that our money now serves easily and with com- 
mercial accuracy as a standard of value. 

182. In business, the determination of standards is 
becoming a matter of more and more importance. The 
time is not far distant when the business manager, if 
he is to succeed, will have to know, when he burns coal 
to generate power, how many horse-power hours he 
ought to get for every pound ; if he uses cloth to make 
garments, how many yards should be cut for every one ; 
if he employs labor, how many hours of work should go 
into every job. That we have been able to get along 
thus far by only guessing at such standards is due to 
the fact that we have been wasting vast natural re- 
sources with but little competition. 

183. The mere known existence of a standard is in 
itself a great stimulus to efficiency. A certain office 
manager determined standards for work on typewrit- 
ers. No other measure of betterment was introduced. 
Also no attempt was made to drive the typists. Never- 
theless they knew that the office manager knew what 
constituted a fair day's work. The result was an im- 
mediate increase of the amount of work done by every 
typist, except one, whose performance the standards 
showed to be already about 100 per cent efficient. 

No matter how conscientious one may be, no matter 
how determined he may be to do his best, unless he can 
compare his actual achievement with a proper stand- 
ard, he will almost always let down from what he might 
do. Human nature seems to be made that way. When, 
beside having a standard, all performance is regularly 
and systematically compared with it by means of Eec- 
ords, when all inferior performance is corrected by the 
application of Instruction and, if need be, by Disci- 
pline ; and when all good performance is regularly and 



200 APPLYING EFFICIENCY PKINCIPLES 

systematically encouraged by Efficiency Eeward ; then 
the effect in increase of efficiency in many actual cases 
has been nothing short of marvellous. 

184. The application of Standards to the executives, 
and to the business as a whole, is especially important. 
An example of the practical working of this is given 
in Article 53. 

Expenses will not decrease of themselves. The gen- 
eral manager first sets a standard, to which expenses 
must come down. The realization of standard cost then 
becomes a function of the factory manager and of the 
superintendents, foremen and assistants. 

For this purpose the expenses are segregated into 
groups. These will vary somewhat with circumstances, 
but Table 7 is offered as a suggestion. 

TABLE 7 

Direct Labor Appropria- Standard 

tion Allotment 

Department! $75 000 $63 000 

" 2 50 600 41300 

" 3 36 000 28 100 

" 4 46 800 46 000 

5 42 600 34180 

Total 250 900 212 580 

Direct materials 260 000 234 000 

Total Direct Labor and Materials .... 510 900 446 580 

Direct use of Equipment 63180 60 021 

Indirect labor: 

Department A 9 000 6 480 

Other 3 000 2 340 

Indirect materials 40 000 32 000 

Maintenance 11820 6 779 

Supervision 35 000 35 000 

Power, including light and heat 25 000 22 500 

Rent 115 000 103 000 

Miscellaneous 5 000 5 000 

Total overhead expense 307 000 273 120 

Total annual expense 817 900 719 700 



STANDAEDS ^ 201 

The column headed Appropriation gives the total of 
each cost as estimated from the accounts to be suffi- 
cient for the expected production and existing effi- 
ciency, while the column headed Standard Allotment 
does the same except that the assumed efficiency is 100 
per cent. 

The determination of existing efficiencies is a vital 
feature of this process. It is discussed in Chapter XV, 
Determination of Efficiencies. 

The responsible executives should not be allowed to 
exceed their appropriations without very good reason, 
and they should be given Efficiency Eeward in propor- 
tion as they succeed in reducing their actual costs to- 
ward the standard allotment. In Articles 129, 130 and 
132, the responsibility of executives for various costs 
is discussed. 

It is desirable that these methods should be started 
as early as possible in betterment work. There are two 
ways of producing efficiency. One is to bring it down 
from above by such methods as are here suggested; 
and the other is to bring it up from below by minute 
time-study work, adaptations of conditions, instruction 
of workers, and so on. The former method gets re- 
sults of considerable value much more quickly than 
the other, and it is therefore desirable to bring down 
as much efficiency as possible from above as quickly as 
possible. Also if the executives receive an Efficiency 
Eeward for reduction of expenses, they are much more 
apt to favor the work and thus to enable efficiency to 
be brought up from below more quickly than if they 
opposed it. 

185. When standards are set for direct workers, it 
is desirable that they should be permanent unless con- 
ditions change, and it is imperatively necessary that 



202 APPLYING EFFICIENCY PRINCIPLES 

they should not be made more severe. The executives 
are usually men of sufficient intelligence and in close 
enough touch with the management to permit stand- 
ards to be set for them on the basis of fairness only ; 
and with the distinct understanding that a standard 
that is unfair to the owners will be changed in their 
favor, just as much and just as promptly as it would be 
changed the other way if it were unfair to the execu- 
tive. On this account and because of the importance of 
getting standard allotments and efficiency reward based 
upon them into effect as soon as possible, methods may 
be employed to rough out standards for the executives 
that would be objectionable if applied to the direct 
workers. 

Take for example, indirect materials, in Table 7. 
It would take a lot of work and considerable time to 
set a standard for this expense by any methods of 
accurate scientific analysis. For this purpose we may 
set a standard for it by the method of comparative 
records. That is, we may look back over previous rec- 
ords of the business and find that about the lowest an- 
nual expense shown for indirect materials on about the 
estimated production is $32,000 ; or we may know that 
some other plant of the same kind and about the same 
size spends $32,000 per year for this purpose. Also 
we may apply general knowledge ; that is, we may know 
that it is a rare thing to find an efficiency of better than 
80 per cent for indirect materials, and knowing that 
the plant in question is not particularly efficient in this 
respect, we may feel sure that it ought to be able to 
effect a 20 per cent reduction in its annual bill. For 
any or all of these reasons, we may feel justified in 
making the standard allotment for indirect materials 
$32,000. Obviously, the standard thus set is likely to 



STANDAEDS 203 

be grossly inaccurate, but if it will quickly lead to a 
reduction of somewhere near $8,000 in annual expenses, 
its accuracy is of minor importance ; and if we actually 
get our indirect materials for the year for $24,000 we 
can reduce our standard allotment for the next year. 

If we were to set a standard for a workman in such 
fashion and he should make a serious effort under the 
incentive of efficiency reward, he would probably beat 
the standard handsomely, because comparative records 
themselves usually show only inefficient performances. 
If we should then make the standard more severe, he 
would probably quit trying. In fact, making standards 
more severe after they have been beaten is the prin- 
cipal cause of standing pat on piece rates. 

However, this rough and ready way of setting stand- 
ards for executives has an important bearing on the 
forms of efficiency reward that should be offered them, 
and therefore comes up again in Articles 285 to 288. 

18G. Returning to the general subject of Standards, 
all knowledge and every means of acquiring it are 
properly used for their determination, but the time 
study is the instrument most used and most important. 
It is capable of such valuable use, not only for the de- 
termination of Standards, but throughout all manage- 
ment, that it requires careful explanation. 

187. There are as many different ways to make a 
time study as there are objects sought in so doing. 
It is necessary, therefore, to have clearly in mind just 
what information is wanted, and to make the study ac- 
cordingly. 

188. Table 8 (page 206) shows an example of a time 
study made for the purpose of determining standard 
times for a wide range of jobs on the wood-working 
machine called a joiner. 



204 APPLYING EFFICIENCY PKINCIPLES 

In order to advance betterment work rapidly, it is 
necessary to derive the standards from as few studies 
as possible, and it is therefore necessary to analyze 
the work, if possible, into elements which will recur in 
every job. The column headed Operations in Table 8 
shows these elements in this case. 

The analysis into elements may go to as great refine- 
ment as necessary. The greater the refinement, the 
longer the time needed to make the study; and this is 
an important consideration, where there are, as usual, 
very many standard times to determine. The subdi- 
vision into elements should therefore not be carried 
further than is necessary to accomplish the purpose 
sought. 

Gilbreth's method of having work done in front of a 
moving-picture machine with a large and finely divided 
clock dial included in each picture accomplishes the 
most minute analysis thus far attained. This method 
is of great value where the cost of the operation stud- 
ied is enough to warrant the necessary expense in 
carrying to the utmost the application of the principles 
of Instruction and Correct Methods. This case usually 
occurs only where an operation is performed very of- 
ten by large numbers of workers. 

Usually the stop watch with face divided into hun- 
dredths of a minute, is close enough to accuracy, and 
allows fine enough division into elements, for every 
commercial purpose ; and it is the instrument usually 
employed for time-study work. 

189. As an example of an analytical time-motion 
study for the deduction of general formulas, Table 8 
is given, and in it and throughout these articles, those 
elements which recur again and again, thus consti- 
tuting a definite cycle, will be called the ' ' Main Cycle. ' ' 



STANDABDS 205 

The elements in Table 8 are not stated in the order 
of performance but are assembled according to that 
variable upon which their total time of performance 
depends. Under "variables," each is stated and an 
algebraic symbol for it is assigned. First there are 
four elements which are done once per every group of 
pieces handled and machined together. As the sum of 
the standard times for these elements is .131 minutes, 
we get the term .131 N of the formula for the time of 
main cycles. 

Next, under "Operations" in Table 8, are two ele- 
ments of time, whose total in any job depends upon the 
lengths of cuts taken and upon whether these cuts are 
with or across the grain. These result in the terms 
.003 L and .005 1 of the formula. 

Then follow two elements which are done once per 
every group of edges handled and machined together, 
which give the term .017 E of the formula. 

The elemental standard times given in Table 8 are 
the average of several such elemental standards de- 
termined each for a different kind of work. Again, 
each of these elemental standards was derived from 
several observations of actual times for the perform- 
ance of that element. The method of determining 
standard time from actual time is discussed in Articles 
198 to 200. 

Elemental actual times can not be observed continu- 
ously, because no one can handle stop-watch, pencil, 
and paper fast enough to observe and record such short 
times without interruption. One must first analyze the 
work into its elements; and then, as an element oc- 
curs, one must time it, and then allow other elements 
to go untimed, until he has recorded the observation 
and is ready to make another. One must, of course, 



206 APPLYING EFFICIENCY PEINCIPLES 

make several observations of the actual time of every 
element. If the first few that are taken closely ap- 
proximate uniformity, one may be satisfied with not 
less than three observations. If they diifer much, one 
must continue to observe until any new reading pro- 
duces only a negligible change of the general average 
from its previous value. 

To make sure that there has been no substantial 
error in the determination of elemental actual times, 
and also that enough of these have been observed to 
obtain fair average values, it is a good plan to let the 
stop-watch run completely through several main cycles, 
and thus obtain values of its total time independently 
observed. For example, in Table 10, the elemental 
actual times total .897 minute as the actual time of one 
main cycle; while the average time of eighteen main 
cycles observed in total was .889 minute. Where an 
agreement as close as this is found, the observations 
of the elemental times may be taken as near enough 
for practical purposes. 

TABLE 8 

Example of Analytical Time-Motion Study for the Deduction of 
General Formulas 

The main cycle was analyzed into the following: — 

operations and standard times 

Time per handling 

-T , - , „. Number of pieces 

Number of handungs = :r^ — r ^- — n ir — 

Number machined together. 

Minute 
Pick up pieces from truck of new work "1 q^q 

Move pieces to table of machine / 

Lay pieces onto truck of finished work 047 

Turn to truck of new work 025 

Total time per handling 131 



STANDAEDS 207 

TABLE 8 (CONTINTJED) 

Time per Inch Cut 

With grain : 003 

Across grain 005 

Time per group of edges handled and machined together: 

Handle and inspect pieces between cuts Oil 

Inspect after final cut 006 

Total time per group of edges 017 

VARIABLES 

T . ,T 1 number of pieces 

Let N equal r ^- — r: ri — 

number machined together 

Let L equal total number of inches cut with the grain 
Let I equal total number of inches cut across the grain 

T X TT 1 total nvunber of edces to be machined 

Let E equal r t — ■ ^^^ v- — t~i iz — 

number of pieces machined together 

Then time of main cycles for job in minutes equals 
.131N + .OOSL + .0051 + .017E. 

The average time in minutes for the elements was 
determined by only three time-motion studies. 

The number of pieces to be machined together was 
set by the judgment of the foreman, taking care to 
make the number large enough. 

Standard times were calculated by the above formula 
for a wide range of work and for oak, chestnut, poplar, 
and birch, beside occasional other woods. 

These times were put into effect as the basis of 
standard time and bonus, and proved satisfactory with 
the following exceptions : 

As to one important article, it was necessary to 
require onty one to be machined at once instead of two, 
as at first required; 

Birch proved to be so much more difficult to work 
than the other woods, that the elements based on 
lengths of cuts had to be increased; and 

On a few parts the operation of joining was found 



208 APPLYING EFFICIENCY PBINCIPLES 

to involve special elements, for which time had to be 
allowed; for example, one part had to be placed in a 
fixture and removed from it after the cut. As all the 
corrections involved increases of the standard time, 
they were easily made. 

190. The time and labor required to make a time- 
motion study of the type shown in Table 8, are con- 
siderable. Where standard times can be set for a wide 
range of work from a few studies of this kind, it is 
efficient to make them; but where the object is only 
to determine a standard time for some one operation, 
they are not usually justifiable. 

In Table 9 the elemental times are omitted for brev- 
ity, and only th^ir sum is given as the standard ' ' time 
of main cycle for one panel." If the best actual total 
time of a main cycle independently observed were taken 
in Table 9 as the standard time for a main cycle, it 
would be .243 minute, instead of the .2305 obtained by 
the summation of standard elements. As the average 
actual total time of such a cycle in the shop was not 
far from .33 minute, the difference between a stand- 
ard time of .2305 and one of .243, was altogether less 
important than it was to get approximate standards 
into effect at the earliest possible moment. In general, 
if a fairly good and faithful workman can be observed, 
and if his method can be accepted as correct, and if a 
number of his main cycles are timed in total, and then 
the standard time is determined from these actual 
times for the main cycle as a whole, on the principles 
explained in Articles 198 to 200, the result will be found 
to be practically the same as one reached by a long and 
careful time-motion study. 

On this point Kimball says (Principles of Industrial 
Organization) : 



STANDAEDS 



209 



"It should be carefully noted that time and motion study 
are not essential features of all management. . . . Care must 
be exercised that the limitations of their usefulness are ob- 
served, otherwise, like too highly developed cost systems, the 
cost of the results will be out of all proportion to their use- 
fulness. There are many kinds of work where refined time 
and motion study, for the sake of determining principles 
quantitatively, would be an absolute waste of money." 

TABLE 9 

Operation — Joining 

Material — Oak core, veneered. See sketch 

Part — Panel, See sketch 

Machine — Joiner 57 

Workman— H I , No. 276 



Macttined along this dimension 
with the grain 



f: 

i. 



One piece handled at a time. 
No cross grain cut. Machine 
one edge only, with one cut. 



Time of main cycle for one panel by summation of stand- 
ard elements = .2305 Min. 

Average of 5 actual main cycles observed separately was .333 Min. 
One of these totals was .243 and one .265. 



191. A time-motion study of the form given in Table 
8 may be justified, not only where a wide range of 
operations may be covered by a few studies, but also 
where the variables which enter into the equation for 
standard time themselves fluctuate over a wide range. 

Such a case is given in Table 10. The operation has 
been analyzed into its elements, standard times have 
been determined from these ; and from this analysis is 
synthesized the formula given for the standard time to 
rip veneers for any job. 



210 



APPLYING EFFICIENCY PRINCIPLES 



TABLE 10 

Summary of Detail Observations taken at frequent intervals diu-ing 



Order— 468 
Article— 9B-13 
Operation — Ripping Veneers 

Material "1 Veneer strips, except the narrow strips for 
Part / edges, etc. put on in the cabinet room 
Machine — Rip saw 102 
Workman — 357 

Average width of strips as finally applied to cores = 6 J^ in. 
Average waste = 13 . 5 per cent, of cross-cut strips of veneer 
Average number of ripped strips = 1.008 (average number of the 
cross-cut strips from which the former are cut) 



Operation 



Time (Minutes) 

A 

Actual St'd 



Remarks 



1. Pick up cross-cut veneers 
from truck 071 

2. Move cross-cut veneers 
from truck to saw table. . . .008 

3. Lay down cross-cut veneers 

on saw table 003 

4. Sort cross-cut veneers on 

saw table 135 

5. Inspect veneers during 
process 034 

6. Pick up cross-cut veneers 
for ripping, from table of 

' rip-saw 035 

7. Place cross-cut veneers 
against fence of saw 029 

8. Measure veneers during 
process 062 

9. Adjust saw fence to proper 
width of cut 165 

10. Move veneers along fence 

up to saw 009 

11. Rip veneers 075 



Main Cycle only 

All times are per one de- 

Uvery of ripped veneers 



.071 



. 008 Done once in two deliver- 
ies 

. 003 Done once in two deliver- 
ies 
.135 



.034 



.035 
.021 
.06 
.162 



.009 
.068 



This probably could NOT 
be so efficiently done by a 
separate inspection force 



Carried forward 



.626 



.606 



' Actual average feed = 
85.9 ft. per min. 
Standard average feed = 
95 ft. per min. 
Average number of rip- 
ping cuts per bunch of 
ripped pieces handled to- 
gether = 2.28 
Average number of fin- 
ished ripped pieces per 
delivery = 3.76 



STANDAEDS 



211 



TABLE 10 (continued) 

Brought forward .626 .606 

12. Move ripped pieces from 
behind saw to front of saw 

table 048 .044 

13. Lay down ripped pieces on 

table of saw 014 .014 

14. Save usable scrap and by- 
product 04 .04 

15. Throw out other scrap 028 .028 

16. Match up and assemble 
ripped veneers on table of 

saw 02 .019 

17. Mark veneers 059 .056 

18. Carry ripped pieces to 

truck 025 .015 Losses of time were all 

19. Lay ripped pieces down due to having truck too 
on truck 008 .008 far from saw 

20a. Move from truck of ripped 

to truck of cross-cut work .007 .007 
or 
20b. Move from truck of ripped 

work to saw table 022 .021 Include both 20a and 20b 

in standard time, as the 
times given are averaged 
per delivery 

Totals 897 .854 Efficiency = 95 per cent. 

Average of 18 totals inde- 
pendently observed = 
.889 

Overall Operation 

Regular production 286 .68 272 . 286 .68 X .95 = 272 

(Main cycles only) 

Work on other machines .5 .5 

Trucking 8.66 8.66 

Other handling of veneers, 

aside from main cycle .33 .33 

Clean up about saw .33 .33 

Get drink 83 .83 

Instruction from foreman.... 2.17 2.17 

Fetch needed articles 1.17 1.17 

Sort and arrange by-product . . .83 .83 

Study job order 1 .00 . 1 .00 AuxiUary operations = 

Make records 2.5 2.5 6.3 per cent, of total 

Total 305 290 .42 Efficiency = 95 per cent. 

OVERALL standard time in hours = .01775 (.0321 + .00008181) Nw 
where I = length, in inches, of one surface to be veneered, plus one inch 

for overhang of rough veneers; 
N = number of such surfaces to be veneered; 
w = width, in inches of one surface to be veneered, plus one inch for 

overhang of rough veneers. 



212 APPLYING EFFICIENCY PRINCIPLES 

In ordinary shop practice, if it were determined to 
pay piece rates for ripping veneers, either the fore- 
man would set a price on every job by a rough esti- 
mate, or, from previous overall records, a price would 
be set, probably based on either the linear feet, or on 
the square feet of veneers produced. 

As to the first method, the best that can be said is 
that it would be better than failing altogether to apply 
the principle of Efficiency Eeward, provided that the 
foreman, in setting his prices, did not violate the prin- 
ciple of the Fair Deal. 

As to the second method, it fails to take account of 
important variables. For example, suppose there were 
two jobs ; one being to cut veneers for 200 cores, each 
36 inches long by 27.5 inches wide ; and the other for 
100 cores, each 61 inches long by 32.5 inches wide ; all 
cores to be veneered on one side only. 

Each job totals 1,375 square feet, and the time for 
the two on a square-foot basis would be the same ; but 
the first requires 3.55 hours, while the second requires 
only 2.33 hours. 

The first job requires the cutting of 2,700 linear feet 
of veneers; and the second, of 2,660. On this basis, 
the second job would be allowed 98.5 per cent of the 
time allowed the first, while it should be allowed only 
66 per cent, an error of 50 per cent. 

The method of averaging previous overall records 
also assumes that all jobs on whose records the piece 
rate is based, were done at 100 per cent efficiency. 
Since probably all of them were below this, the result 
is to make the piece rate too high on the average. 
Under the incentive of piece rates, the workers make 
earnings that to the employer appear excessive. He 
then cuts the rates, and the workers retaliate by limit- 



STANDAEDS 213 

ing production ; and thus the original intention of piece 
rates, that of stimulating production, is frustrated. 

In a long and complicated main cycle, like that of 
Table 10, any one cycle will vary greatly from stand- 
ard. For example, in some cycles, the workman would 
omit altogether such operations as ''4. Sort cross-cut 
veneers on saw table," and ''5. Inspect veneers during 
process." On other cycles he would be obliged to 
spend on these operations much more than the average 
time allowed for them in the standard cycle. 

In consequence of this, cycles done in a short time 
may represent, not cycles that were done at high effi- 
ciency, but those in which the worker was fortunate 
in the brief time that was required for certain ele- 
mental operations. Consequently, if on a job of this 
kind only complete cycles were timed and one of the 
short ones was taken as the standard, it might repre- 
sent unusually favorable conditions, and the time set 
might therefore be too short, and unfair to the worker. 
Complication and irregularity of the main cycle may 
therefore require a time-motion study, as the means 
both of taking account of all the variables, and of 
setting a fair standard. 

This is specific case of the general law: that the 
more complicated any phenomenon is, the more neces- 
sary it is to analyze it into its elements, and to deal 
with every element separately, in order to be able to 
understand it and to handle it successfully. 

In tinae-study work, care should be taken to note col- 
lateral information that may be of use later. For 
example, when the data for Table 10 were collected, 
the question of improvement in methods of inspection 
was under consideration. Therefore, whenever any of 
the direct workers under study was noticed to do any 



214 APPLYING EFFICIENCY PEINCIPLES 

inspecting, the time so occupied was especially noted, 
and record made as to whether or not it would be bet- 
ter to assign it to a separate inspection force. See 
Table 10, Operation 5, '^Inspect veneers during pro- 
cess." Similarly opposite, ^'18. Carry ripped pieces 
to truck" is noted the cause of the loss of time. Such 
information may be very useful later, as the workman 
may have to be shown just where and how he is losing 
time, before he can make a good efi&ciency on the 
standard set. 

Table 10 exemplifies also the kind of a time study 
which covers not only the main cycle, but also all opera- 
tions that are necessary to production. Those not part 
of the main cycle are called ''auxiliary operations," 
in these chapters. Since time for auxiliary operations 
must be allowed in setting standards, it is necessary 
that some studies of this type should be made ; but on 
account of the time needed to observe the auxiliaries, 
it is desirable that these studies should be as few as 
possible. This is discussed more fully in Article 208. 

It will be noted that among the auxiliary operations, 
8.66 minutes are allowed for trucking. The question 
of allowing a skilled worker to do such things for him- 
self is discussed in Articles 166 and 216. 

It is apparent that the nearer the parts into which 
an operation is analyzed approach absolute elements, 
the easier judgment on the efficiency of their perform- 
ance becomes, especially to one who is not familiar 
with the operation under study. For example, refer- 
ring to Table 10, one with no particular knowledge of 
veneer work would find it impossible to judge whether 
a workman ripped a certain quantity of veneers at 
reasonable speed; but, after a few observations, he 
would not find it difficult to judge the efficiency of an 



STANDAKDS 215 

elemental operation like ' ' 1. Pick up cross-cut veneers 
from truck." Hence the greater the importance of 
accuracy of the standard, the more likely is a time- 
motion, or even a moving-picture study, to be justifi- 
able. 

192. Table 11 gives a study which was made to check 
standard times previously determined. Some pecu- 
liarities of its form arise from the fact that standard 
times for the shop had been set by another efficiency 
engineer. Because of failure of the clients to act on 
his advice, the shop could not attain the standards set, 
or in fact an efficiency above about 50 per cent on them. 
Later the clients adopted the measures that had been 
recommended, and very good efficiencies were made. 
During the period of failure to attain the standards, 
they were at first thought to be too severe and I was 
called in to investigate the matter. 

193. Eeferring to Table 11, it will be noticed that 
the strips of cloth were not perfectly standardized. 
Time would certainly have been saved if all the strips 
issued to the man had been exactly the same, but this 
could not have been accomplished without wasting 
materials. In general, of course, some labor will be 
required to save materials, and the question is only 
whether the material saved pays a profit on the labor 
used. 

194. In the Eemarks opposite the second operation 
of the main cycle, it will be noticed that an allowance is 
made for the strip's catching on the next beneath. 
This represents a loss of time due to an unadapted 
condition. If the reader will picture to himself what 
the raw edge of wire mesh cloth cut off by shears is 
like, he will realize that it would be exceedingly ex- 
pensive to adapt these edges so that they would not 



216 



APPLYING EFFICIENCY PRINCIPLES 



catch on one another. That being the case, the only- 
thing to do is to allow the workman the time necessary 
to separate them. 



OOOOOOOOOO0 
OOOOOOOOOO0 



195. TABLE 11 

Man J Name, Nesjemm 
Man ^-^^_ 2Q^g 

Order No. 801 A & B 
Operation — Cut cloth 
Article — No, 211, milk strainer 
Machine — Punch press A 45 

Unit standard time as determined by ,0.1 hour per 100 pieces 

Operation is to blank strainers out of brass-wire mesh cloth as shown 
by above sketch. 

Seven strips out of ten give 22 strainers as shown by full circles. 

Three strips out of ten give 21 strainers, the last one being shown 
dotted. 



Operation 



Main Cycle 
Time (Minutes) 
Actual St'd 



Remarks on Standard 
Time Allowed 



1. Pick up uncut strip 028 

2. Move strip from pile to 
machine 062 

3. Enter strip in machine 086 

4. Place right foot on pedal. . ,013 

5. Trip press with foot 

6. Machine blanks out 1 piece [ ,246 
(21 .7 times per strip) .... 

7. Move strip from hole to 
hole, lengthwise (9 times 
per strip) 125 

8. Same crosswise, 10 times 

per strip 228 

9. Move from next to last, to 
last hole, lengthwise (.7 
times per strip) 032 

10. Same, crosswise, .7 times 

per strip 016 

11. Same, diagonally, .3 times 

per strip 025 

12. Move strip to waste box . . .029 

13. Drop strip into waste box . .005 

14. Move hand to pile of uncut 
strips 016 

Total time per strip 911 



.014 Average of all not notice- 
ably slow 



.0571 

.086 

.013 

.246 



.125 



Man's best three per- 
formances; plus allow- 
ance for strips catching 
on next beneath, twice 
out of 13 times 



.190 Average of all not notice- 
ably slow 



.032 
.016 



Care is necessary to econ- 
omize material 



.025. 

.024 Average of best five 

.005 

.016 • 

.849 



STANDABDS 



217 



TABLE 11 (continued) 

Overall Operation 
Time (Minutes) 





Operation 






, *_ 


» 


Remarks 








Actual 


St'd 




1. 


Blanking strips 














'One 


in 


.865 


.849 












1.08 


.849 






5 






.835 


.849 












.843 


.849 












.854 


.849 












.854 


.849 












.865 


.849 






5 






.822 


.849 












1.185 


.849 






/ 






.72 


.849 


Short strip 


2. 


Examining cut pieces 












(should be unnecessary) . . 


.15 


.000 




3. 


Straightening end of 


1 










)iece 




.46 


.46 




4. 


Blanking strips 














rOne 


in 


1.135 


.849 








It 


tt 


.875 


.849 






5< 


It 


tt 


1.165 


.849. 








ti 


It 


.95 


.849 


Noticeably slow 






tt 


tt 


.875 


.849 




5. 


Watching 




.27 


.000 


Idle 


6. 


Delayed by torn edge 


of 










one piece 




.5 


.5 




7. 


Blanking 












5 


One 


m . . . 




.85 
.875 
1.01 


.849 
.849 
.849 






tt 








n 




Noticeably slow 






<< 
it 


ft 




.85 
.846 

/ .67 

\ .78 


.849 
.849 

.000 






tt 






8. 


Examining cut i 


)iece 


and 


Should be unnecessary 




die 




.000 




9. 


Get hammer 




1.44 


.000 




10. 


Hammer di< 
Lav hamme 


3 




.26 
.05 


.000 
.000 




11. 


r dow 


n. . . . 




Should be unnecessary 



12. Hammer die again "I ^g 

13. Lay down hammer / ' 

14. Blanking one strip 85 

Total for 21 strips = 

449 pieces 23.974 

Total for 100 pieces. ... 5 .34 
" " 100 " .... 6.00 
(according to ) 



.000 



.849 



18.789 
4.19 
6.00 



218 APPLYING EFFICIENCY PEINCIPLES 



TABLE 11 (concluded) 

Time available for rest, chang- 
ing service cards, handling ma- 
terial between jobs, etc., by 

's standard less this 

table 66 1.81 

Per cent, of total time available 
for rest, changing service cards, 
handling material between jobs, 

(Next above) X 100. ^, 
etc. = ^^4 — J — J 11- 30. 

s standard 

's standard allows ample time for the job 



In this case it was desirable to test the severity of 
the standards previously set by comparing my own 
determinations with the previous ones in a few sample 
cases. That this might give reliable results, it was 
necessary that my own determinations should be 
especially accurate. The main cycle was therefore 
analyzed into its elements and a time-motion study 
was made. It resulted in a standard time of main 
cycle per strip of .849 minutes. As a check on this, 
the total time of twenty-one main cycles was observed 
separately, and is recorded in the study of Overall 
Operation. One of these is a short strip and its time 
therefore could not be taken as sufficient. To require 
absolutely the shortest or next to shortest time shown 
for a full length strip would probably also be too 
severe. We might therefore fix on the third best 
record for a full length strip, as being a fair standard. 
This record is .843 minute ; and no one could say, even 
after making a time-motion study, that .849 was any 
nearer right. Because the time-motion study was 
made, one has much more confidence than he could have 
had otherwise that a standard of .849 is about right; 
but if the only object had been to set a standard time 
for this operation, one might better have timed the 



STANDAEDS 219 

twenty-one main cycles only, and set the time for one 
at .843 minute. 

196. When time is thus set by an overall observa- 
tion, care must be taken to observe a good workman 
and to note that he is not loitering on the job, and that 
he is using a correct method. Observations of a slow 
man, or of one who purposely loiters, are almost sure 
to give too long a standard time and to give trouble 
later, especially if they are made the basis of Efficiency 
Eeward. 

197. It therefore becomes very important to recog- 
nize loitering. This can be done because no one can 
loiter uniformly. Therefore if a worker's time for 
any repetitive operation, whether that be a single mo- 
tion or a complete cycle of operations, approximates 
uniformity, it is a good indication that he is working 
faithfully and that the speed shown is the best of which 
he is then capable. 

198. Of course unit times will never run absolutely 
uniform, and one therefore needs to know how to set a 
standard time from readings that vary somewhat, but 
not sufficiently to invalidate the study. My own prac- 
tice is as follows : — 

If the times vary almost enough to make me throw 
out the study, or if for other reasons I suspect loiter- 
ing, I take the shortest time of which I have valid 
record. 

If the times vary, but not quite so much as in the 
preceding case, I take a time near the best, usually the 
second best, but sometimes the third best or an aver- 
age of several readings near the best. 

If the times run fairly near uniformity, except some 
which are noticed as slow at the time of performance, 
I throw out the slow ones and average the rest. 



220 APPLYING EFFICIENCY PRINCIPLES 

If the times run pretty close to uniformity, I average 
them all. 

If the times vary widely, but evidently because of 
variations in minor conditions which it would not pay 
to adapt, I average all the times. 

The smaller the elements into which an operation is 
analyzed for the purpose of time study, the easier it is 
to see if any element is performed below normal 
speed; and in the original record made on the spot, 
these readings should be noted as ' ' Slow. ' ' This mem- 
orandum is very valuable when it comes to working up 
the standard time. 

My experience with my own method has been that 
if it errs, it will make the standard time too short. 
While it is desirable to get the time right as quickly 
as possible, the safe error on putting the time into the 
shop as a basis of Efficiency Eeward, is to make it too 
short. It can always be lengthened, until it is found 
to be right, but once it is announced to the workers, 
it is very objectionable to shorten it. 

Knoeppel states his practice in the matter as fol- 
lows : 

1. "Where there are no pronounced variations in the read- 
ings, a fair standard may be determined by adding one-half 
the difference between best and average times to the best 
time. 

2. "Where there are pronounced variations in the readings, 
drop readings above the average ; and using the balance, add 
one-half the difference between best and average times to the 
best time. 

One's judgment in these matters is materially influ- 
enced by the importance and frequency of the opera- 
tion, and consequently the amount of money that it 
will pay to spend on improving it. As Gantt says : 



STANDAUDS 221 

Having determined the minimum time in which the work 
can be done, the problem of setting a reasonable task (stand- 
ard time) is still to be solved. If the work is simple, and 
is to be repeated many times per day, and day after day, the 
task should be a difficult one for even the good workers at 
first, for with repetition they will acquire skill, and in a short 
time it will become easy. In such work it will often pay to 
spend quite a long time to train workers to do it efficiently. 
If, on the other hand, the operation is but seldom done, it 
may not pay to spend much time training workmen to do it 
with great efficiency. In this case we should not make the 
task too severe, but such as a good workman can do without 
the preparation of special training. 

199. In Table 11, Article 195, Main Cycle, Opera- 
tions 9, 10, 11, it is noted that care is necessary in 
order to economize material. Any circumstance of 
this kind should be noted, and the standard should 
allow the full time actually taken for such operations, 
unless there is good reason to the contrary. 

200. No standard time is allowed for Overall Opera- 
tions 8, 9, 10, 11, 12 and 13 because the tool room ought 
to keep the dies in such condition that a machine opera- 
tor would never be bothered in this way. Cutting out 
the time is no reflection on him. When this study was 
made, tool-room service had not yet been perfected to 
the point where it could be relied upon to this extent. 
This is an example of the fact that, in order to set a 
correct and permanent standard, the time-study man 
often has to look ahead to the effect of betterments 
that have not yet been made. 

Some conditions, like the installation of an improved 
machine, or the development by the management of an 
improved method and the instruction of the workers 
in it, so evidently shorten the times necessary that a 
revision of standards is obviously fair, and the work- 
ers make no objection to it; but an improvement in 



222 APPLYING EFFICIENCY PBINCIPLES 

tool-room service would not be likely to appeal to a 
machine operator as justifying a cut in standard time. 
However, if it is likely to be a long time before a con- 
dition of this kind can be adapted and it is desirable 
to give the worker an efficiency reward soon, a tem- 
porary standard may be put in, allowing the worker 
the time required by the unadapted condition, with the 
distinct announcement that the standard is temporary 
and will be revised later. 

201. Table 6, Article 166, gives a time study made 
for the purpose of determining a correct method and 
division of labor and standard time based thereon. 

202. The time study of Table 12 was made for the 
purpose of seeing what principles of efficiency were 
violated and to determine quantitatively the loss of 
time due to each. Almost any time study will throw 
light on these questions ; but it may be necessary, espe- 
cially during preliminary work, to make some studies 
particularly to investigate them. 

For a time study to determine standards it 'is neces- 
sary that an efficient workman should be selected ; but 
when the purpose is to determine causes of inefficiency, 
workers of all grades of efficiency should be sampled. 
The sample given in Table 12 happens to be taken from 
a low grade. 

At the end of Table 12 the losses of time shown in 
the study are classified according to the principles of 
efficiency, and the amount and percentage of loss due 
to the violation of each principle are summed up. In 
this case the largest loss of time, 34.5 per cent, might 
be prevented either by the application of the principle 
of Personnel, by substituting a skilled worker for the 
unskilled one found on this job, or by developing the 
skill of the actual worker by giving him instruction. 



STANDAEDS 223 

A few studies of this kind, in addition to the in- 
formation of the same kind derived from other studies 
as a by-product, and from the analysis of the troubles 
of the minor executives, will do much to show what 
principles of efficiency are being violated, consequently 
what ones need to be applied to bring up the efficiency, 
and the relative importance of the several principles 
in the case in hand. 

TABLE 12 



Order— 357 313 Date: 

Articles No. 24 and No. 6202. 
Operation — Sanding 

r Operator— No. 244, U B- 

Workmen — \ 

[ Helper —No. 248, F E- 



Operator is a young fellow who has been employed 
only two months, and is not considered a good hand on 
this machine 

Payment is on time rates only 
Machine — Sander No. 09 
Feed — Middle and fast. See Remarks column 

ii/T„+^.;„i / For No. 24, quartered oak 
Material- 1 p^^. j^^ ^202, birch 

„ . / No. 24 — SoUdbeds, 32." X 50." X J4" 
^*"~"\ No. 6202— SoUd tops, 72." X 22." X W 

Time (Minutes) 
Operation ^ * \ Remarks 

Actual St'd 

1. Under instruction by fore- 
man 86 .86 

2. Men himting for something 
which they apparently did 

not find 3 .06 .00 Adapt conditions 

3. Millwright cut off end of 

sand paper 12 .12 

4. Measure 4 birch pieces. 

(See operation 8) 6 .6 

5. Start machine 42 .42 

6. Watch running of machine 

and stop same 1 .38 .5 Correct slowness by re- 



Carried forward 6.44 2.50 



warding efficiency 



224 



APPLYING EFFICIENCY PEINCIPLES 



TABLE 12 — (continued) 



Brought forward 


6.44 


2.50 


7. Restart machine. . 


.26 


26 


8. Test machine by running 




through four birch pieces 






5 in. X 12 in. X Min.... 


.83 


.83 


9. Inspect machine 


.14 


.14 


10. Try to get two of above 






small birch pieces out of 






machine 


1.68 


0.00 



11. Foreman got these out 

12. Restarting 

13. Helper trucking No. 24 
beds to front of machine. . 

14. Dust off beds 

15. Helper moves truck to rear 
of machine 

16. Helper blocks this truck in 
position 

17. Operator enters first piece 
in machine 



.08 

.8 

.21 

.34 

.21 

.27 



18. Piece (17) stuck in machine .27 

19. Pass one bed (17 and 18) 
through machine and place 

it on rear truck 51 

20. Inspect bed (17 to 19) 2 

21. Operator enters first piece 

in machine 23 

22. Pass 15 No. 24 beds through " 
machine 

23. Handle and inspect last 1^6.71 
bed out of machine onto 
truck 

24. Truck beds (13 to 23) to 
front of bed 61 

25. Helper brings truck to rear 
of machine and blocks same 

in position 21 

26. Operator enters first bed in 
machine for second pass. . . .18 

27. Pass sixteen No. 24 beds 
through machine second 
time I 5 . 05 

28. Handle and inspect last 
piece out of machine onto 
truck 

29. Truck beds (26-28) to ' 
front of machine. 37 



Carried forward 



These little pieces should 
.00 not have been put into 

the machine. Instruct or 
.8 change personnel 

.21 

.34 

.21 

.18 Correct slowness by re- 
warding efficiency 

.00 Instruct or change per- 
sonnel 



.39 Was on middle feed, 
should have been on fast 
.2 

.18 Correct slowness by re- 
warding efficiency 

3.05 Feeding lengthwise on 
middle feed. Should have 
.19 been on fast feed. In- 
struct or change person- 
nel 

.37 Correct slowness by re- 
warding efficiency 

.21 

.18 



3.64 Feeding lengthwise on 
middle feed. Should have 
been on fast. Instruct or 
. 19 change personnel 

.37 



25.60 14.44 



STANDAKDS 



225 



TABLE 12 (continued) 



Brought forward 

30. Inspect work 

31. Adjust machine 

32. Operator enters first bed 
in machine for third pass . . 

33. Pass sixteen No. 24 beds 
through machine for third 
time 

34. Handle and inspect last 
piece out of machine onto 
truck 



35. Truck beds (32-34) 
front of machine 



to 



36, Adjust machine 

37. Operator enters first bed in 
machine for fourth pass. . 
Pass sixteen No. 24 beds 
through machine fourth 

time 

Handle and inspect last 
piece out of machine onto 

truck 

Truck nine No. 24 beds 
(37-39) to front of ma- 
chine 

Adjust machine 

Operator enters first bed in 
machine for fifth pass. . . . 
Pass nine No. 24 beds (38) 
through machine fifth time 
Handle and inspect last 
piece out of machine onto 

truck 

Superintendent talking to 
operator 

46. Truck two No. 24 beds 
(42-44) to front of machine 



38 



39 



40 



41 
42 

43 

44 



45 



25.60 
.53 
.13 

.11 



.19 



.68 



14.44 
.53 
.13 

.18 



5.41 3.64 Same as on (26) 



.19 



.00 



.15 


.00 


.13 


.00 


5.35 


.00 


.23 


.00 


.37 
.12 


.00 
.00 


.2 


.00 


4.31 


.00 


.09 


.09 


.56 


.00 



00 



47. Adjust machine 13 

48. Operator enters first bed in 
machine for sixth pass 22 

49. Pass two No. 24 beds 
through machine for sixth 
time 7 

50. Handle and inspect last 
piece out of machine onto 
truck 28 

51. Handle one piece .13 

Carried forward 45.62 19.20 



00 



00 



00 
00 



Noticeably slow 
Cut out operations 35 to 
43 by mstruction or 
change of personnel 
Two cuts over face and 
one cut over back were 
enough for these beds 



Cut out operations 45 to 
50 by instruction or 
change of personnel 



226 



APPLYING EFFICIENCY PRINCIPLES 



TABLE 12 (continued) 



Brought forward 

62. Putting through seven- 
teenth No. 24 bed, discov- 
ered by foreman, four 



45.62 19.20 



passes. 



3.65 



53. Truck away seventeen No. 
24 beds to elevator 43 

54. Truck No. 6202 tops to 
machine 15 

55. Helper brings empty truck 
to back of machine and 
blocks it in position 1 

56. Start one No. 6202 top in 
machine 18 

67. No. 6202 top (56) stuck in 
machine 33 

68. Pass one No. 6202 top 
through machine for first 
time 43 

59. Handle same (58) onto 
truck and inspect 36 

60. Start one No. 6202 top in 
machine 15 

61. Pass nine No. 6202 tops 
through machine 3 .58 

62. Handle and inspect last 
one onto truck 09 

63. Truck ten No. 6202 tops to 
front of machine 32 

64. Helper brings empty truck 
to back of machine and 
blocks it in position 

65. Adjust machine 

66. Start one No. 6202 top in 
machine 

67. Pass 10 No. 6202 tops 
through machine 

68. Handle and inspect last 
from machine onto truck . . 

69. Bring truck to back of ma- 
chine 

70. Get block for truck 

71. Block truck (69) in posi- 
tion 

72. Inspect No. 6202 tops 

73. Sort No. 6202 tops 

74. Truck No. 6202 tops re- 
quiring a second pass to 
front of machine 

Carried forward 61 .91 29 . 53 



.07 
.19 


.071 
.13 


.33 


.18 


4.16 


3.04 


.08 


.19 


.26 
.11 


.26 
.11 


.06 
.20 
.31 


.06 
.20 
.31 


.75 


.37 



.68 Should have had only 
three passes, along with 
the other 16 beds. In- 
struct or change person- 
nel 

.43 

.15 

.1 

.18 

Instruct or change per- 
.00 sonnel 

Correct slowness by re- 
30 warding efficiency 

Correct slowness by re- 
. 19 warding efficiency 

.18 

IOnly one can be in machine 
at once. Correct slowness 
by rewarding efficiency 
.19 

.37 



Noticeably slow. Correct 
by rewarding efficiency 



Noticeably slow. Correct 
37 by rewarding efficiency 



STANDARDS 227 

TABIiE 12 (concluded) 

Brought forward 61.91 29 . 53 

75. Operator at toilet. Helper 

oiling machine 4 .75 4 .75 

76. Supt. and foreman inspect- 
ing work 92 .92 

77. Start one No. 6202 top in Correct slowness by re- 
machine 33 .18 warding efficiency 

78. Pass ten No. 6202 tops 

through machine for sec- Fast feed was used. Op- 

ond time 4 .85 3 .04 erator failed to feed con- 
tinuously. Correct slow- 
ness by rewarding effi- 

79. Handle and inspect last ciency 
piece from machine on to 

truck 09 . 19 Induce operator to cut 

80. Handle pieces 23 .00 out, by rewarding effi- 

ciency 

81. Truck No. 6202 tops to 

elevator 52 .52 

82. Under instruction by fore- 
man 26 .26 

f Stop watch 73 .86 39 .39 

Total ] 

[standard watch 71.94 
Efficiency = 53.5 per cent. 

Losses of time shown by the above study are due to 
the following causes : — 
Lack of — 

Selected personnel, or of 
Instruction — 25.47 minutes ; 34.5 per cent. 
Adapted conditions, 3.06 minutes ; 4.2 per cent. 
Efficiency reward, 6.3 minutes ; 8.5 per cent. 
The total standard time plus the losses totals very 
slightly more than the actual time, because in a few 
cases the elemental standard allowed the men a little 
more time than they used. 

In the observation of a large number of short times, 
as in Table 12, there is considerable chance of error. 
Eeadings of time by the stop watch will be more or 
less incorrect, and there is a chance that some readings 
may be lost. To make sure that such errors do not 



228 APPLYING EFFICIENCY PEINCIPLES 

escape detection, it is a good plan to take tlie total time 
independently by a standard watch. This was done, 
and the two totals are compared near the end of Table 
12. It is not to be expected that the two totals will 
agree exactly; but they ought to come close enough to 
show that the stop watch readings are near enough for 
practical purposes. 

203. As another example of the use of the time study 
to detect causes of inefficiency; in a shoe factory it 
was observed that the cutters of upper leather were 
losing a great deal of time. A study of the type shown 
in Table 12 showed that the losses of time were caused 
almost altogether by their inability to obtain the dies 
necessary to cut their work on the clicking machines. 
It showed also that in a very large percentage of these 
cases, it was a die of one particular pattern that could 
not be obtained. This brought to light the fact that 
the supply of those dies was insufficient for the de- 
mand, as the pattern was the best seller that season. 
However, it proved possible so to distribute the orders 
for this pattern among the cutters that, instead of 
every cutter having to use every die, as had previously 
been the case (so that a cutter who wanted a die was 
likely to hunt all over the room for it), the dies used 
by one cutter would be used by him only, so that he 
could keep them at hand, and make the supply of dies 
sufficient for the need. 

204. In some work elemental operations do not re- 
peat themselves in a definite cycle. For example, the 
work of making a complicated sand mold by hand could 
not be analyzed into cycles like those of Table 8 
(Article 189) and Table 10 (Article 191). Where 
there is no definite main cycle, a finer analysis than 
that of Table 12 is usually impracticable with the stop 



STANDAEDS 



229 



watcli; and the observer must decide as to the effi- 
ciency of elements similar to those shown in that 
table, and set standard time accordingly. 

205. It is a bad plan to try to make time studies 
without the knowledge of the workmen observed. It 
is impossible to observe closely enough to set standard 
time anywhere near right, or to make any kind of an 
analytical study, without the worker knowing that he 
is being watched. It is not exactly agreeable to any 
one to be closely watched, and to have every movement 
timed and recorded; but considerable of the unpleas- 
antness is taken off by a frank explanation of what is 
desired. Where such an explanation is made before- 
hand, it is very unusual for a worker to object to a 
time study, even in the beginning of the work, although 
its purposes are then probably mysterious and there- 
fore suspicious to him. If the Fair Deal and Effi- 
ciency Reward are consistently applied, the workers 
find out (and the sooner the better) that the work is 
beneficial to them, and their suspicions completely 
disappear. 




PIG. 5. 



D ^ 

WORKING TIME 
FATIGUE DIAGRAM 



206. Tests of the effect of duration of work on both 
muscular and intellectual power give graphic records 
of the general form of the heavy line curve in Figure 5. 



230 APPLYING EFFICIENCY PEINCIPLES 

It will be noted that power does not reach its maxi- 
mum at once. A similar effect can be noted in time 
studies. If a number of successive elemental opera- 
tions are timed at the beginning of a job, it will usually 
be found that the time per unit decreases somewhat 
irregularly until it steadies about a minimum. There- 
fore a time study commencing when a job is begun, 
ought to continue until time per unit ceases to show a 
progressive decrease. Variation of time per unit ac- 
cording to this law would, of course, not be an indica- 
tion of loitering. 

207. An essential feature of setting a correct and 
therefore permanent standard is the determination of 
a Correct Method. The time study is the usual means 
of doing this. See Table 6, Article 166. This is dis- 
cussed further in Article 227. 

208. The standard time for an operation must cover 
not only the main cycle but also auxiliary operations, 
such short interruptions as can not be avoided, and 
rest. When a study of overall operation is made, the 
final standard can be derived directly from it ; but in 
order to advance the time-study work rapidly, most 
studies should cover the main cycle only. 

My own practice is, after having determined the time 
for the main cycle, to add to it 20 per cent for aux- 
iliary operations and minor interruptions, and then to 
add an allowance for rest. 

209. Experimental research as to required rest is 
needed, but the following may be used as a rough 
guide. Workers who are used mostly to watch ma- 
chines in operation, and who are seated and otherwise 
comfortable while doing so, need no allowance for rest. 
Examples of this occur among machinists operating 
heavy machine tools, and among women weaving wire 



STANDAEDS 231 

cloth. On most kinds of work, 10 per cent of working 
hours for rest should be allowed for males and 12 per 
cent for females. Rest should be increased beyond 
this, according as the worker is exposed to high tem- 
peratures, is subjected to anxiety or other nervous or 
mental strain in connection with his work, or has to do 
heavy muscular work. Thirty per cent of working 
hours for rest may be considered an ordinary maxi- 
mum, but is not the limit; and 100 per cent of rest 
may be approximated in some extreme cases, as in 
some athletic performances of great severity and very 
brief duration, which a good trainer will allow to be 
done only once per day. For example, suppose that 
in Table 11 (Article 195), only the main cycle had 
been covered, and that the standard time for it had 
been set at .849 minute per strip. The standard to cut 
one hundred strainers would then be calculated as 
follows : — 

Main cycle per strip 849 minutes 

Auxiliaries and interruptions, 20 per cent of 
main cycle 17 

1.019 
Divide by .9 to allow 10 per cent of total time 
for rest 113 

Total time per strip 1.13 " 

Average number of strainers per strip = 21,7 

1.13 X 100 

Total time for 100 strainers == = 5.21 " 

21.7 

In comparison with this 's time for 100 strainers was 

.1 hour, or 6 minutes. 

If this, or a similar method is used, it is a good plan 
whenever a study covering both main cycles and aux- 



232 APPLYING EFFICIENCY PRINCIPLES 

iliary operations is made, to compare tlie standard 
time given by it with what would be given by the al- 
lowances, as a test of the latter, especially to be sure 
that they do not allow too much time. 

It will probably be obvious in the case of some op- 
erations that the standard allowances are not sufficient, 
and for them total standard time should be determined 
by overall studies. 

My experience is that the allowances above given, if 
they err, give too little time, so that standards deter- 
mined by them can be relied upon as safe to put into 
the shop. Eesults should then be watched, additional 
studies should be made, if necessary, and standards 
which are found to be too severe should be promptly 
eased off. 

209. One cannot safely err without limit in making 
standards too severe as a first trial, because it makes 
the workers very resentful to put them up against un- 
reasonable standards. It is a delicate and skillful 
operation to get the first approximation near enough 
to the final standard without spending too much time 
on the preparatory studies. 

210. The advisability of allowing direct workers to 
perform auxiliary operations for themselves is dis- 
cussed in Article 216. Assuming for the present that 
they must be allowed, at least until a better method 
can be introduced, to set up machines for themselves, 
the question arises as to whether a separate standard 
time should be determined for the set-ups, or whether 
the time for set-up and for operation should be stated 
as one. 

Either method has advantages, and disadvantages, 
and that one should be chosen which is better for the 
particular case. There is no reason why one method 



STANDAEDS 233 

should not be used for some operations and the other 
for the rest, in the same plant and even in the same 
department. 

The advantage of a separate standard time for the 
set-ups is accuracy and, consequently, a fuller applica- 
tion of the Fair Deal. If the set-up is very long and 
complicated, and especially if it varies much with the 
nature of the work, a separate standard may be re- 
quired. 

For example, a certain machine was used to cut 
pieces to length. On analysis by time studies, it was 
found that a complete set-up consisted of three ele- 
ments as follows: — 

ELEMENT STANDARD TIME 

Original set-up 2 hour 

Change of length to which pieces were cut 1 ** 

Change of cutting tools, to suit material cut 2 ** 

An order of 1000 pieces to this machine might re- 
quire all kinds of time to set-up, according to the 
number of different materials contained in it, and the 
number of different lengths to which they were cut, 
so that it was necessary to set standard time accord- 
ingly. 

Now suppose that the planning department might 
have assembled an order of 1000 pieces all of one 
length and material. The time for the set-up would 
then be .2 hour. Now suppose that the planning de- 
partment neglected this opportunity and sent to the 
machine 1000 pieces of three different lengths and of 
such materials that two changes of cutting tools from 
the original set-up would be required. The standard 
time for the job under these unfavorable conditions 
would then be : — 



234 APPLYING EFFICIENCY PKINCIPLES 

ELEMENT STANDARD TIME 

Original set-up 2 hour 

Changes from above I ^^^f^^^ -Jj-; ;^><^= -^ ;] 

Total 8 '* 

Time to set up a correct order 2 " 

Loss of time by fault of planning department. . . .6 ** 

Now in the service cards and in any graphic record 
like Figure 3 (Article 131) this error will not show up 
because the loss of time is in the standard itself, con- 
sequently the unnecessary .6 hour will be spent in 
setting up, and still the records will show 100 per cent 
efficiency. 

The disadvantage of the separate standard is that 
it covers up any failure of the planning department 
to do its own work so as to minimize the amount of 
time for setting up. One advantage of the single 
standard for set-up and operation combined is that, if 
it is set right for a standard order, any failure of the. 
planning department to assemble such an order shows 
up at once in a lowering of efficiency. Moreover the 
service cards will show exactly where the inefficiency 
occurred, and why. 

Obviously if the work is sufficiently repetitive, so 
that a standard order can usually be approximated, 
the combined standard has the balance of advantage. 

211. The Fair Deal requires that the combined 
standard should be set, not for the most efficient order 
that can ever be assembled, but for the average order 
that is practicable in regular operation. Every varia- 
tion from the standard order then introduces an ele- 
ment of chance into the efficiency of the worker, ac- 
cording to which he profits or loses, not according to 



STANDAKDS 235 

his own efficiency, but by circumstances beyond his 
control. This element of luck can not be entirely elim- 
inated, and has appeared already in the allowance for 
minor interruptions. 

Nevertheless, this element is objectionable, and it 
should be reduced as much as is commercially profit- 
able. My experience has been that when luck runs 
against the direct workers, they are very apt to sus- 
pect unfairness, and that they immediately forget the 
times when it is in their favor. If the work varies 
much, this fact causes any elements of chance to in- 
crease the difficulty of dealing with the workers. This 
brings us around again to the point that, with variable 
work, accuracy and the Fair Deal require a separate 
standard for setting up. 

The extent to which variable or unadapted condi- 
tions are unfair to the workers, depends largely upon 
the form of their Efficiency Reward, and comes up in 
the chapter on that principle, in Article 290. 

The element of chance is reducible by the use of 
recording instruments which show exactly the condi- 
tions that have been encountered. For example, I 
once had a great deal of trouble with a gang operating 
a Linderman machine in a furniture factory. This 
machine builds up wooden parts like the writing beds 
of the sketch. Article 213. The necessary time de- 
pends upon the length of the parts A, B, C, D, E, and 
the cleats, and upon the number of these parts. 
The number of parts A to E would vary inversely as 
their average width ; and this would vary because the 
stock sawyers had to produce such widths as would 
allow them to cut the lumber economically. The length 
of the pieces and the built up width were necessarily 
stated to the gang in the service card, as they could 



236 APPLYING EFFICIENCY PEINCIPLES 

not otherwise have known what to do. The average 
width of pieces A to E was determined by records of 
about sixty thousand of them, and the effort was made 
to determine their number by the following equation : 

nW 

N = , in which 

w 
N = number of pieces A to E, 

n = number of built up parts (Given by the service cards) 
W =z width of built up parts, and 
iu ==i average width of 60 000 pieces A to E. 

This went all right until one day the gang got a run 
of narrow pieces. Their apparent efficiency went away 
down and they became convinced that the standard 
time had been reduced, and that the whole thing was a 
scheme to exploit them. 

This trouble was finally removed by installing a 
counter which was operated by the pieces as they 
passed through the machine. It was put where the 
gang could see it and read it. With some difficulty 
they were convinced of its accuracy. They were also 
allowed to read it and report the figures to the 
despatcher, instead of his reading it, for the service 
card records. This treatment in time convinced them 
that they would receive a Fair Deal and after that they 
got after their Efficiency Reward, and gave the owners 
43 per cent increase of production for a 20 per cent 
bonus on their previous time rates. 

However it is better to determine a standard from a 
general average, than to have no standard at all. Har- 
rington Emerson tells of a workman who turned off 
locomotive tires. These tires would have hard spots 
in them and, when the man struck these, he had to 
slow down his lathe. No means were found to adapt 



STANDAEDS 23.7 

this condition, but standard time was averaged from 
determinations of a large number of tires. The result 
was that the workman's average efficiency for succes- 
sive pay roll periods was almost constant. 

212. Another advantage of the single combined 
standard time for set-up and operation is simplicity, 
because it states the time simply as so many hun- 
dredths of an hour for so many pieces. This consid- 
eration will be negligible, unless it materially reduces 
the amount of clerical labor needed to plan and 
despatch. Standard times which take account of all 
the facts can be expressed in the form of algebraic 
formulas and I have had no difficulty in teaching boys 
of only grammar school education to use such formulas 
correctly; or it may be found easier to express the 
formulas as curves and to teach the clerks to use the 
latter. 

213. When similar parts vary in dimensions only, a 
long series of standard times can be easily determined. 
An example of this is shown in Table 13. The opera- 
tion consisted in cutting oif surplus material along all 
four edges of the writing beds, shown in Figure 5, so 
as to reduce them to the sizes shown in the column 
headed, ''Dimensions." In preceding operations 
rough dimensions had been so adapted that only one 
cut along every edge was needed. Standard times of 
2.53 hours per hundred 42 by 32 by ly^ inch beds, 
with oak or chestnut cleats, and 2.9 hours per hundred 
with birch cleats, were determined by time study. 

X Y , a very good and reliable workman, was 

given a lot of these beds with oak or chestnut cleats, 
and some 60 by 32 by li/i inch with oak or chest- 
nut and some with birch cleats, and was told to go 
ahead and keep his own time and report it, and was 



238 



APPLYHnTG efficiency PEINCrPLES 



also told that it was proposed to use his time to set 
standards for the line, except the 42 by 32 by ll^ inch 
bed, on which he was informed of the standard already 
set by time study. 

He reported that this standard time was all right, 
and also reported the times shown in Table 13 for the 
60-inch beds. For reasons which it is unnecessary to 
explain, it was expected that the standard time for 
beds of the same materials ought to vary with the 
sum of their lengths and widths. As the times re- 
ported by X Y for beds with oak or chestnut 

cleats were almost in this proportion, the time for the 
other beds with these cleats was interpolated and ex- 
terpolated according to these dimensions. 

TABLE 13 



Date- 
Workman — See Columna, Remarks 
Helper— One per workman 
Operation — Shaping to size 
Machine — Shaper 72 
Material — See Columns 
Part — Writing beds 



-=m 



^-•■HgS:j!=gfefeJfa^&^=^==^==^WI 



Dimensions 



Material 
of Cleats 



Standard Time 

in Hours per 

100 Beds 



Remarks 



42. X 32. XlH Oak or chestnut 2 .53 

Birch 2.9 

42. X36. X1J4 Oak or chestnut 2.71 

Birch 3.14 

60 . X 32 . X 1 Ji Oak or chestnut 2 .89 

Birch 3.37 

50 . X 36 . X IK Oak or chestnut 3 .07 

Birch 3.63 

64. X32. XlM Oak or chestnut 3.07 

Birch 3.63 



IX — ■ Y — reports that he 
can do these beds at this 
rate. Agrees with stand- 
ard set by time study 



STANDABDS 



239 



TABLE 13 (concluded) 



54. X 36. XlH Oak or chestnut 
Birch 

60 . X 32 . XIH Oak or chestnut 
Birch 

60. X 36. X 1^ Oak or chestnut 
Birch. . ., 

66. X 36. XIH Oak or chestnut 
Birch 

72. X 36. XIH Oak or chestnut 
Birch 



!Q — T — did sixteen of 
these oak beds at the rate 
of 3.82 hours per 100. 
Efficiency, 85 per cent. 



!X — Y — reports that he 
can do these beds at the 
rates called for by these 
standards 



3.33 
4.00 



3.51 

4.26 



3.77 
4.61 

4.05 
4.98 



'Q— T— did seven of 
these birch beds at the 
rate of 3.85 hrs. per 100 

r-^ = 111 per cent, effi- 
^•°^ ciency 



On these dates 



Check 
-, X Y did the following job: 



NO. OP 
BEDS 

26.. 
12.. 
43.. 
49.. 
26.. 
7.. 



STANDARD 
MATERIAL OP TIME 

DIMENSIONS CLEATS HOURS 

.50X32X1M Oak 75 

. 50 X32X1M Birch 41 

. 60X32 XI J4 Birch 1.72 

.54X32X13^ Birch 1.78 

.42X32X1M Oak 66 

. 42 X32X1M Birch 2 



ACTUAL 
TIME 
HOURS 



BPPI- 

CIENCT 

PER CENT 



5.52 



5.3 



104. 



Average of previous records of X Y 's efficiency, 105 per cent. 

As the time thus confirmed for the smallest beds 
with oak or chestnut cleats seemed fairly consistent 
with that determined by time study only for the same 
beds with birch cleats, the latter was accepted, and 
times for the rest of the line with birch cleats were 
determined by interpolation and exterpolation accord- 
ing to dimensions. The results were checked by com- 
parison with the times for beds with the softer cleats. 



240 APPLYING EFFICIENCY PRINCIPLES 

The table was then checked as shown, by two exist- 
ing records of Q T , a good but irregular work- 
man. As a variation of his efficiency from 85 per cent 
to 111 per cent was only what would have been ex- 
pected from his general record, these comparisons 
were considered as confirming the table. 

The standard times were also checked by giving 

X Y the mixed order shown at the end of the 

table, on which the results were so consistent, that the 
times were then established as the basis of Efficiency 
Reward. 

214. Table 13 illustrates four important points : — 

1. The necessity for taking all short cuts consistent 
with substantial accuracy, in the determination of 
standards, in order to cut down the cost of this work. 

2. The possibility of determining standard times in 
series, with a minimum expenditure of time and labor. 

3. That, as records of standards analytically deter- 
mined, become available as bases, records of regular 
shop performance may determine other standards by 
comparison. 

4. That all standards, not merely those of time, 
should be checked, if possible, by methods independent 
of their determination. 

215. The determination of standard times is facili- 
tated if the other parts of the schedules, Table 3, of 
the department can be made out first. As soon as this 
information is available, it can be seen what opera- 
tions are frequent enough to justify making minute 
time-motion studies in order to determine a large num- 
ber of standards by formulas like those deduced in 
Tables 8 (Article 189) and 10 (Article 191), what 
standard times can be quickly determined by a series 



STANDAEDS 241 

like that of Table 13, and what operations had best be 
sized up quickly by overall timing of a few main cycles. 

216. Eef erring to Figure 5 (page 229), Fatigue Dia- 
gram, universal experience shows that, by stopping 
work at some point D and resting at some point E, the 
power can be brought up from that of fatigued per- 
formance, EF to a power EG equal to OM, that of 
initial performance, and that thereby an area 
FGHIJKL can be added to the diagram, greater than 
the area CDEF lost during rest. 

If any one doubts this, let him try to work continu- 
ously with absolutely no rest. 

It is evident that in order to attain a maximum of 
continuous power, rest should begin when fatigued per- 
formance, DC, equals AN and should continue jintil 
renewed performance, EG, will equal initial perform- 
ance, OM; provided that area CDEF is less than area 
FGHIJKL. (A voluminous discussion of fatigue will 
be found in Goldmark's ''Fatigue and Efficiency.") 

The obstacle to the practical application of this is 
that both the form and the length of the Fatigue Dia- 
gram differ greatly with individuals. It would be easy 
enough to determine, by time studies, when and how 
long any individual should rest, but the result could 
not with certainty be applied to any one else. 

Any investigation of this kind evidently belongs to 
the ultimate refinements of betterments. 

The salient facts of immediate commercial interest 
are: — 

That the output of workers is increased by suitable 
short intervals of rest during working hours ; 

That by setting standard times, including allowances 
for reasonable rest, giving the workers an efficiency 
reward, and allowing them to rest at their own discre- 



242 APPLYING EFFICIENCY PRINCIPLES 

tion (except as this is modified by work in gangs) very 
great gains in efficiency with corresponding reductions 
of labor cost can be effected as compared to previous 
practice. 

Also rest does not mean a complete cessation of 
activity. The effects of fatigue, though somewhat 
general because of the distribution of the fatigue 
poisons by the blood, are most intense in the organ 
which has been at work. This is a matter of common 
experience. Hence local rest is needed long before 
general rest. Also much work, especially that of ma- 
chine operators, is almost incredibly monotonous. 
Monotony hastens fatigue, hence a certain diversity 
of work increases efficiency and output by affording 
local rest and relieving monotony. 

For example, in adapting conditions in a punch 
press department, it was decided to allow the press 
hands to open boxes of sheet tin, and so forth, for 
themselves, instead of having this done for them by 
laborers, with the deliberate purpose of affording the 
press men local rest and variety of occupation. These 
requirements conflict with those of division of labor 
and specialization, and one cannot go too far in either 
direction, without loss of efficiency. The time study is 
the usual means for determining the efficient compro- 
mise. 

217. The question of hours of labor is somewhat 
similar to that of rest. It ought to be possible, after 
conditions have been sufficiently adapted so that they 
can, in the main, be kept approximately constant, to 
conduct a series of experiments in which only the 
hours of labor would be varied, and thereby to deter- 
mine the number which gives the greatest output per 
unit of cost. 



STANDABDS 243 

218. When any job is seldom repeated, as in a de- 
partment which does special work or in a jobbing shop, 
it is sometimes possible to analyze the work into re- 
curring elements. In that case standard times can be 
determined for the elements, and the standard for any 
job can be built up out of the elemental standards. 

219. When this is not possible, the foreman's guess 
is better than no standard. If a time study would 
establish a standard of three hours, it is better to have 
a worker, under the stimulus of Efficiency Reward, 
attain a standard of four hours set by the foreman's 
guess, than to have him take five hours without a 
standard. If Records are kept they will soon show 
whether the foreman has a tendency to estimate either 
too little time or too much, and he can take this into 
account in setting times thereafter. In this case too 
long a standard time once set does not create an em- 
barrassing precedent, as it does in the case of repeti- 
tive work. 

220. There are two classes of standards of materials, 
specifications, and standards of waste in use. 

Specifications are discussed in Articles 24, 174, 176. 
About all that it is desirable to add to what is said 
there is to call attention to the value, in the prepara- 
tion of specifications, of competent counsel through 
staff organization. For any buyer, except Govern- 
ment, the name of a proprietary article may be a suffi- 
cient, and the most efficient, specification. 

221. Standards of waste of materials in use are dis- 
cussed in Article 331. Such standards are much more 
feasible than is usually supposed. There is hardly 
any common industrial use of material for which the 
setting of these standards is more difficult than for the 
cutting of tanned hides into pieces for shoe uppers. 



244 APPLYING EFFICIENCY PRINCIPLES 

Not only is every hide different from every other hide, 
but the problem of fitting the odd shapes of the shoe 
parts into the hide, is never twice the same. 

Nevertheless the value of the material has caused 
shoe manufacturers to set standards. 

The process is to establish grades of shoes and of 
leather, commonly known as A, B, C and D. An order 
for a lot of shoes goes first to the leather store room. 
There a skilled workman sorts out the necessary ma- 
terial for the order in the proper proportions of A, B, 
C and D. Notwithstanding the difference in hides, an 
expert sorter will pick out any number of lots of hides 
for several hundred pairs of any grade, so that any 
one of the lots will cut to the order with practically the 
same waste as any other lot. 

The work of the sorter adapts the conditions to a 
close enough approximation, so that it is practicable 
to set standards, which are commonly expressed as so 
many square feet of uncut hide per pair of shoes of 
any size, width, pattern and grade. The sorter calcu- 
lates from the standards the number of square feet of 
hide needed for the order, and issues this amount to 
the shoe cutter. 

Standards of waste of material in use are commonly 
set either by averaging all previous records, by averag- 
ing previous records of exceptionally good perform- 
ance only, or by giving a sample job to an especially 
expert and economical workman and deriving the 
standard from his result. Any of these methods is 
preferable to having no standard; but one can not be 
sure of a correct standard, unless the determination 
includes the analytical study of waste in at least one 
sample case. In order to be sure that the error of 
sampling is not great, it is a good plan to compare 



STANDAEDS 245 

the result of the analytical study with such records as 
are available. The analytical study may reveal ways 
in which material can be saved, just as a time study 
often shows how to save time. Hence one would ex- 
pect a standard for materials, set by analytical study, 
to allow less waste than one set by comparative 
records. 

The bills of materials mentioned in Article 113 
should contain statements of the standards of waste in 
use, as soon as the latter have been determined. These, 
of course, may be expressed as so much material al- 
lowed for so much work. 

Just as with standard times, a standard for waste 
of materials on repetitive work should not be made 
more severe after it has once been set. Therefore, in 
case of doubt, the standard should be made severe 
enough at first; and if, in use, it appears to be too 
severe, it should be re-studied, and should be promptly 
eased off if that course is found to be correct. Stand- 
ards for materials do not affect the workers quite so 
closely as do standards of time ; but still first approxi- 
mations to standards of waste cannot be made exces- 
sively severe without causing the ill will of the workers. 

Here again skillful work is required to get the first 
approximation close enough without spending too 
much time and money on its determination. 

222. In determining standards either of time or of 
waste of materials, it is to be expected that under the 
pressure to get them out quickly and at a minimum of 
expense, a few will be made too easy, and that the 
workers will earn very large Efficiency Rewards on 
them. These should be allowed. The demonstration 
of the Fair Deal thus made will pay a profit in the 
long run. 



246 APPLYING EFFICIENCY PRINCIPLES 

223. In connection with the determination of stand- 
ards, especially those of indirect expense, attention is 
called to the value of competent counsel through cor- 
rect Organization. For example, a power engineer, 
given a description of the power plant, could at once 
set all its standards of any importance from his gen- 
eral knowledge. Any one not so qualified would need 
a lifetime of research to determine them. 

224. Referring to Articles 342 to 344, when burdens 
and standards have been determined for every opera- 
tion, we can substitute in the cost formula 

M {U -\- u) -\- E {W -\- w) -i- h {E -^ e), 

for M, standard quantity of direct materials, 

for Z7, standard unit price of direct materials, 

for u, burden on direct materials, 

for H, standard man-hours of direct labor, 

for W, standard wages per man-hour, 

for w, burden on direct labor, 

for h, standard hours of direct use of equipment, 

for E, hourly cost of running direct equipment, and 

for e, burden on direct equipment ; 

and obtain the standard cost of the operation. 

The sum of the standard costs of all operations is 
the standard cost of the finished article. 

If this is not low enough to meet competition, it is 
necessary to : — 

Improve processes and equipment and reduce 
standard cost; or 

Eedistribute the overhead as explained in Article 
339, so as to enable the article to meet competition; 
or 

Combine the two above; or 

Demonstrate to the competitor that he is selling 
at a loss, or 



STANDAEDS 247 

Cease to make the article. 
An important value of the standard is that it gives 
a common measure to which all kinds of production 
can be reduced. 

Take painting, for example; it looks simple and easy, but 
is an arduous occupation, calling for a great deal of skill 
and knowledge, and is dangerous to the workman. The in- 
terior of a ship had to be painted, three coats, different paints 
for the different coats and for different places in the ship. 
Some of the metal was smooth, some was rough; some areas 
clear, some full of rivet heads, air ports, fittings, etc. ; some 
areas unobstructed, some so obstructed that the painter had 
to fasten his brush to the end of a stick in order to reach 
them, and finally, both the sides and overhead had to be 
painted throughout. Prior to the establishment of real stand- 
ards I maintained graphical statistics of daily production, 
recording the daily yardage of each painter; and I went so 
far as to make a separate curve for each kind of paint and 
each coat. But there was absolutely no way of interpreting 
the figures. A low yardage might represent a big day 's work, 
if the man had been doing overhead, obstructed work, say; 
and another man might turn in a yardage three times as 
great and yet not work nearly so hard. To judge each man's 
work from day to day, and to compare different men on the 
same day, were impossibilities, due to the variable elements 
affecting these figures. 

When, however, by time study, a standard time for plain 
straightaway side work was worked out, and factors obtained 
for reducing all other kinds of painting to this common de- 
nominator, we had a standard of performance and a standard 
of cost for all men and all classes of work; after which the 
handling of that force became a simple matter of detail.^ 

225. An important point in connection with de- 
termination of commercial standards is not to be too 
fussy about it. 

Accuracy must be paid for, and excessive accuracy 
is no more worth the cost than it is in machine design. 
If efficiency is perhaps only 70 per cent, it is usually 

*F. G. Coburn, "How to Use Statistics in Management." 



248 APPLYING EFFICIENCY PRINCIPLES 

much more important to get into effect quickly a stand- 
ard that is 5 per cent from the true value, than it is to 
haggle and delay and spend a lot of time and money to 
get any nearer right. There is valuable truth in the 
engineering maxim, **Good enough is best." 



Chapter XI 
COERECT METHODS 

INSTRUCTION 

226. 

JR. SMITH says, *'It was one of the intellectual 
• shocks of my young manhood to discover that an 
analytical chemist could often get only $50 a month. 
I had long looked with awe upon the accurate percent- 
ages and detailed reports of the analytical chemist. 
This water contains 2.341 grains of such and such a 
substance per gallon. I wondered at the marvellous 
man who could get out such fine results, and to learn 
that at times he gets but $50 a month was a shock. 
The explanation is this. The chemical analysis of 
ordinary specimens is a technical process of a per- 
fectly definite character. If a work is definite and 
therefore capable of being reduced to clear cut instruc- 
tions, the pay that it commands is not likely to be 
high, even though the work itself be complicated. It 
requires good memory and painstaking obedience to 
instructions. Many persons have these qualities. 
The scarce attribute is judgment, that indefinable 
quality capable of meeting a new situation and 
handling it with common sense, or gumption, to put it 
in a homely term. ' ' 

249 



250 APPLYING EFFICIENCY PRINCIPLES 

It is of interest in this connection that a man capable 
of earning only $50 a month can be enabled to do 
chemical analysis. How to accomplish such a result is 
surely worth the attention of every employer of labor. 
Evidently it is done by the application of the eflSciency 
principles of the Correct Method and Instruction. A 
research chemist has first determined the method and 
recorded it in permanent instructions, and by the aid 
of the latter, the actual analysis can be performed by 
a man of much less ability. The application of these 
principles results in a '* transfer of skill" from the 
man of greater to the man of less ability. Auel says : 

An . . . important line of work consists in the develop- 
ment of manufacturing processes and formulse which, when 
standardized, are recorded in permanent form and issued 
to the various manufacturing departments involved. In this 
way uniformity in product is assured, there is no needless 
repetition of lessons or experiences previously learned, and 
the company is made independent of any individual's knowl- 
edge. 

227. In Table 6, Article 166, a Correct Method is 
determined by a time study. In Article 203 there is 
another example of the determination of a Correct 
Method by time study. In industry this is the usual 
means to that end. Extensive time-motion studies and 
even moving-picture studies are profitable for this 
purpose, if the amount of money spent in wages for 
any operation is considerable. For the determination 
of a Correct Method, comparative studies, especially 
moving-picture studies, of several good workers doing 
the same work independently, will give valuable in- 
formation. In the case of the analytical chemist, time 
studies probably did not enter into the matter at all. 
The time study is a particular case of the universal 



CORKECT METHODS 251 

means to the Correct Method; that is, scientific in- 
vestigation. Gantt says : 

We can never be sure that we have devised the best and 
most efficient method of doing any piece of work until we 
have subjected our methods to the criticism of a complete 
scientific investigation. ... In order to get the best results 
these four conditions are necessary: 

First. Complete and exact knowledge of the best way of 
doing the work, proper appliances and materials. This is 
obtainable only as the result of a complete scientific investi- 
gation of the problem. 

Second. An instructor competent and willing to teach the 
workman how to make use of this information. 

Third. Wages for efficient work high enough to make a 
competent man feel that they are worth striving for. 

Fourth. No increase of wages over day rate unless a cer- 
tain degree of efficiency is maintained. . . . 

An investigation divides itself into three parts as follows: 
An analysis of the operation into its elements; a study of 
these elements separately; a synthesis, or putting together 
the results of our study. This is recognized at once as sim- 
ply the ordinary scientific method when it is desired to make 
any kind of an investigation, and it is well known that until 
this method was adopted, science made practically no progress. 

228. In the investigation, analysis and synthesis, 
Gilbreth has pointed out that the best results can not 
be obtained merely by the elimination of inefficient ele- 
ments. This may effect considerable improvement, 
but will not attain the possible limit unless the ^ele- 
ments retained are improved wherever possible. This 
may take the form of substitution of new elements for 
the old until the whole operation is radically changed. 
A well known example of this is Gilbreth 's improve- 
ment of brick laying. Evidently there is an oppor- 
tunity here for the use of competent counsel through 
correct Organization. 

229. The statement has often appeared that the time- 
study man who sets a standard ought to be able per- 



252 APPLYING EFFICIENCY PRINCIPLES 

sonally to do the work in the time he sets. The read- 
ing of these chapters ought to convince any one that 
time study itself is a highly skilled specialty. If be- 
side requiring this skill, we insist upon the manual 
skill of a 100 per cent eflEicient workman, we either re- 
strict the activities of every time-study man to a very 
few operations, or we call for a superlatively gifted 
creature who is rare indeed. In either case we greatly 
increase the cost of time studies ; in the first, by multi- 
plying the number of men ; in the second, by using very 
high priced men. 

Instead, this is a case for division of labor, as shown 
by Figure 1, Article 66^ the Diagram of Organization, 
in which separate corps of time-study men and of in- 
structors are provided. 

230. The experience of efficiency engineers and of 
educators in trade schools and in Y. M. C. A. voca- 
tional classes, is that the best teachers of industrial 
processes are skilled workers who also possess some 
natural gift for teaching. 

231. Such an instructor and a time-study man can 
very well co-operate. Gantt, in "Work, Wages and 
Profits, ' ' Chapter VIII, gives in detail the history of a 
case of such co-operation. Any one interested in the 
matter will do well to read it carefully. After doing 
so, he will understand better than is otherwise likely, 
what difficulties are encountered, how the time-study 
man and the instructor help each other and both help 
the direct worker, and why the first two can accom- 
plish more together than either can separately. In 
Table 12, Article 202, an actual time study shows the 
possibility of saving 34.5 per cent of the time of two 
workers by the joint labors of a time-study man and 
an instructor. 



COERECT METHODS 258 

The time-study man has first to study the work, de- 
termine the Correct Method, and establish standard 
time for the performance of the task. 

Considerable of this may have to be done in order 
to obtain the data necessary for the selection of a 
worker as instructor ; but betterment will be advanced 
if the latter can co-operate even while the preliminary 
work is going on. Especially in the determination of 
the Correct Method, this co-operation is valuable, the 
time-study man making minute analyses of the work 
and pointing out to the instructor where time is lost, 
and the latter suggesting improvements and trying out 
all changes in actual work before they are adopted. 

232. As this work shows up unadapted conditions, 
the management should adapt them as fast as possible. 
It is supposed that meanwhile Planning and Despatch- 
ing are also being installed. 

233. As soon as these parallel lines of work have 
gone so far that it can be expected that direct workers 
will be able, without much delay, to earn an Efficiency 
Eeward on the standards set, the work of the time- 
study man and the instructor should be extended to as 
many direct workers as they can handle at once. The 
instructor should teach these men the Correct Method, 
guide them in the application of it, and seek to develop 
in them a manual skill equal to his own. 

The time-study man should analyze their work, find 
out where they lose time and from what causes. When- 
ever they lose from lack of skill or from failure to 
follow the Correct Method, he should call the atten- 
tion of the instructor to them and the latter should 
give special attention to these matters. Whenever the 
direct workers lose from other causes, the time-study 
man should take the matter up with the management. 



254 APPLYING EFPICIENCY PEINCIPLES 

through the regular channels of Organization (See 
Figure 1), and the management should remove such 
causes of loss as fast as possible. 

234. In summing up the instance cited in Article 231, 
Gantt says : 

In considering this work an important element to be con- 
sidered is the time needed, "When we began our study in 
June, 1908, we already had in operation means for learning 
how long each worker spent on every job and how much 
work was done.^ There was also in existence a system of 
laying out the work from the office.^ In other words the 
general mechanism of our system was in operation and work- 
ing smoothly, yet it was several months before we got enough 
task work going to make any real show. If we had attempted 
to introduce it much faster, we should have met with two 
difficulties. First, it would have been impossible for us to 
remove all the obstacles for a large number of weavers.^ 
Second, the poor weavers would probably have persuaded the 
good ones not to try to do as we wished. . . . Time is 
needed to overcome prejudice and to change habits. This is 
a psychological law, and its violation produces failure, just 
as surely as the violation of the laws of physics or chemistry. 

235. A great deal of tact is necessary in introducing 
the form of Instruction thus far discussed. Unless the 
management has previously given the workers a Fair 
Deal for so long that they have acquired confidence, 
they are almost sure to think that the whole thing is a 
scheme to exploit them. 

If, then, all the direct workers are put under instruc- 
tion at once, there is danger of open rebellion, to say 
nothing of the difficulty of handling a large number of 
workers at the outset by an instructor who has prob- 
ably never before taught anybody anything. If a few 
direct workers are selected for instruction, they will 

* Eecords. 

* Planning and Despatching. 
'Adaptation of Conditions. 



CORRECT METHODS 255 

probably find it impossible long to withstand the senti- 
ment of the shop, unless they are soon encouraged by 
a substantial increase in their earning power. 

In order to avoid these difficulties, it is necessary 
before any direct workers are put under instruction, 
that the work should be carefully studied, the Correct 
Method and Standard Time determined, that Condi- 
tions should be Adapted, and Planning and Despatch- 
ing developed to the point where good workers can 
begin to earn an Efficiency Reward after only a short 
time under instruction and without working exces- 
sively hard. 

It is also necessary that the instructor should be 
paid enough to make him value the job, and that he 
should receive an Efficiency Reward based on the effi- 
ciency of his pupils. 

The instructor should then be broken in gradually 
by giving him at first only one, or a very few, direct 
workers; and these should be carefully selected from 
among those who are not only quick and skillful, but 
are also willing to give the new methods a fair trial. 
If these men find at once that they are not driven to 
excessive exertion, and soon find that their earnings 
are increased, they will value the opportunity to work 
under the new methods, and others will want to join 
them. 

The whole thing will be helped very much if the 
scheme has previously been explained to the workers. 
Methods for doing this are outlined in Articles 306 
and 307. Even when all this has been done, the man- 
agement may find some irreconcilable s blocking the 
work by agitating against it, and must apply vigorous 
Discipline to these trouble makers, if it expects to 
succeed. 



256 APPLYING EFFICIENCY PEINCIPLES 

236. In many cases, as in Table 6, Article 166, the 
Correct Method is simple enough, so that all the work- 
ers need is a written statement of it, which may be in 
form similar to that sho^vn for the Standardized 
Operation in Table 6. We then have a special case of 
the Correct Method, a Standardized Operation; and a 
special case of Instruction, a written Standard Prac- 
tice Instruction. These written forms should be issued, 
with the service cards, to the workers concerned, at 
least until the methods become so familiar that instruc- 
tions are no longer needed. 

A variation of the Standard Practice Instruction 
consists of statistical or other information, usually for 
the use of foremen or other executives, of which an 
example is given in Table 14. 

237. A company manufacturing typewriters em- 
ployed an expert on twist drills to standardize their 
grinding and to make out standard practice instru(>- 
tions for it. One of the company's mechanics com- 
plained of the standard forms and claimed that he 
could grind the drills so that they would work faster ; 
and when given an opportunity, he made good on his 
claim. 

No matter how methods have been determined, or 
how much confidence is felt in them, all hands should 
always be encouraged to suggest further improve- 
ments, though some efficiency engineers require any 
direct worker using a standard method to make a good 
efficiency on it at least once, before they will entertain 
suggestions from him. 

238. There are many operations for which the work- 
ers' methods can be accepted, either because they are 
good enough or because the operations are so seldom 
done that it would not pay to spend any money to 



To All Foeembn:- 



SAFETY FIRST 
-You will be expected to comply with the following rules: 



First — ^Ascertain weight of load to be Ufted. 

Second — Consult this table for proper size rope, cable, chain, or steel bars to be used. 
Third — Inspect same carefully for defects. 

Fourth — Personally inspect all supports from which weight will be suspended before allowing your men to lift load 
Fifth — Important — Note: AU figures given in the table denote the niunber of pounds that can safely be carried 
by the various materials mentioned in the table When New. 



Table showing safe loads that wire cable, manila rope, chain and steel bars will carry. 





Man- 
ila 
Rope 


WmE ROPE-fraXRAND, HEMP CENTER-Hoisting Rope 


CHAIN 




Size 
Di- 


Iron 


Crucible 
Cast 
Steel 


Extra Strong 

Crucible Cast 

Steel 


Plow Steel 


Common Coil 


BB 


BBB 


Stud Link 


Round 
Steel 
Bars 




Safe 
Load 


Safe 
Load 


Lca9t 
diam. 
aheave 


Safe 
Load 


I^ast 
diam. 
sheave 


Safe 
Load 


Least 
diam. 
sheave 


Safe 
Load 


Lea-st 
diam. 
sheave 


Safe 
Load 


Link 
length X 
width 


Safe 
Load 


Link 
length X 
width 


Sate 
Load 


Link 
length X 
widlh 


Safe 
Load 


Link 
length I 
width 


Safe 
Load 


V,' 


55 

100 

125 

160 

220 

300 

400 

500 

600 

740 

880 

1,030 

1,100 

1,200 

1,380 

1,570 

1,770 

2,000 

2,200 

2,700 

3,000 

3,500 

4,000 

4,600 

5,000 

6,500 

6,200 

6,870 

7,500 

8,000 


480 
680 
1,000 
1,360 
1,760 
2,200 
2,720 
3,880 
6,200 


9' 
12' 
l'-6' 
r-9' 
2'-0' 
2'-9' 
3'-0' 
3'-6' 
3'-9' 


960 
1,360 
2,000 
2,720 
3,520 
4,400 
5,440 
7,760 
10,400 


9' 

12; 

I'-O- 
2'-0' 
2'-9' 
3'-0' 
3'-0' 
3'-9' 


1,080 
1.620 
2,300 
3,120 
4,040 
5,080 
6,300 
8,800 
12,000 


l'-6' 
r-0' 
2'-0' 
2'-3' 
2'-6' 
2-9' 
3'-0' 
3'-8' 
4'-0' 


1,200 
1,800 
2,620 
3,540 
4,660 
6,800 
7,200 
10,000 
13,600 


l'-6' 
l'-9' 
2'-0' 
2'-3' 
2'-6' 
2'-9' 
3'-3' 
3'-6' 
4'-0' 


600 
1,260 
1,750 
2,400 
3,100 
3,900 
4,800 
6,000 
9,400 
10,750 
12,300 
13,150 
14,760 
16,500 
18,250 
20,000 
22,000 
26,260 
30,850 
36,800 


Ufxl ' 
1?<'X1A' 
2 'xIM' 
2K"xlA' 
2H'xlk' 

4H'x3K' 

5H'x3M' 
5!^'x3^' 
5?i'x4A' 
6 'x4K' 

7K'x5K' 
7%'x554' 
8H'x5J«' 


700 
1,500 
2,000 
2,750 
3,600 
4,400 
6,376 
7,750 
10,600 
11,876 
13,650 
15,000 
16,250 
18,260 
21,500 
22,500 
24,500 
29,000 
34,600 
39,500 


IJ^'xl • 
IJi'xlA' 
2 'xlH' 
2JfxlA' 
2H"xl?i' 
2J«'xlH' 
3K'x2H' 
3M;x2H' 

4J<'x3j|' 

5H'x3K' 
8}i'x4A' 
6 'ziH- 

7K'x5)i' 
VA'zi'A' 


800 
1,675 
2,250 
3,160 
4,000 
6,000 
6,250 
8.875 
12,000 
13,750 
15.676 
16,760 
18,750 
21,000 
23,176 
25,600 
27,500 
33,275 
39,500 
45,500 


IK/xl ' 
IJi'xlA' 
2 'xlH' 
2KxlA' 

2k'liH' 
3J<'l2H' 
3}i;i2M' 

4H'l3}i' 
4M'i3H' 
5H'x3J4' 

5Ji'x4A' 
6 '14^ 
6K'x4H' 
6H'x4M' 
7^;x6K', 

SM'xIM' 








-fr- 






1,227 
1,768 
2,400 
3,140 
4,000 
4,900 
7,000 
9,620 
11,000 
12,560 
14,200 
15,900 
17,702 
19,600 


H' 












1 


4,800 
5,900 
6,300 
10,101 
14,000 
15,800 
18,000 
20,300 
22,800 
26,600 
28,100 
31,000 
34,000 
40,500 
47,600 
55,100 
63,300 
72,000 
81,300 


3 'xlJi 
35^'x2 • 
3M'x2!<' 
4K'i2>J' 
5 'x3}i- 

5K'x3K' 

m-zsii- 

6'A'ziH' 
65i'x4K' 
7><'x4K/ 
TA-%i'A- 
7^'i4K' 
S'A'zS'A' 
9>i'x5k' 
10 'x6K' 
lOMi'ieji' 
IWl7K' 

12 'x7'/i' 

13 'x8K' 
13}<i'x8>^- 

14 'xO • 




6,800 


4'-0" 


13,600 


4'-0' 


15,600 


4'-6' 


17,666 


4'-6' 


]k 


8,400 


4'-6' 


16,800 


4'-0' 


19,600 


5'-0' 


22,400 


5'-0' 


im: 


10,000 


6'-0' 


20,000 


5'-0' 


23,200 


5'-6' 


26,800 


5'-6' 


¥: 


12,400 
14,400 
16,800 
10,200 


5'-3' 
6'-6' 
6'-0' 
7'-6' 


24,300 
28,800 
33,600 
38,400 


5'-3' 
5'-6' 
6'-0' 
7'-6' 


28,800 
33,600 
38,800 
44,800 


6'-0' 
7'-0' 
S'-O" 
9'-0' 


32,800 
38,400 
44,400 
51,200 


6'4' 
7'-0' 
8'-0' 
9'-0' 


23,700 
28,300 
33,200 
38,500 


24,800 


8'-0' 


49,600 


i'Ai- 


57,600 


lO'-O" 


66,666 


lO'-O' 














50,200 
56,800 


2Vs' 
Ws' 

in- 














31,200 


9'-0' 


62,400 


9'-0' 


72,800 


ll'-O' 


83,200 


ll'-O' 


























101,500 
112,500 


70,880 
78,500 


37,800 


lO'-O' 


75,600 


lO'-O' 


90,000 


12'-6' 


101,600 


12'-6' 


























45,600 


U'-O' 


91,200 


U'-O" 


106,000 


14'-0' 


122,000 


14'-0' 













































































































TABLE 11 
See also Article 141 



COEKECT METHODS 257 

improve them. In these cases the standard times 
should be determined as quickly and inexpensively as 
possible, the principle of Efficiency Reward should be 
applied and the workers usually need little or no in- 
struction. 

239. There are usually some operations which occur 
so seldom that they do not repay any more attention 
than is necessary to get them done, and on which the 
workers should be paid straight time rates only. 

240. In connection with time-study work all jobs 
should be assigned to one of these four classes and be 
treated accordingly : 

Those which will repay the utmost improvement 
of the method and the continuous service of an in- 
structor ; 

Those which should be covered by written stand- 
ard practice instructions; 

• Those to which the principles of Standards and 
Efficiency Eeward should be applied with little or 
no instruction; 

Those on which the workers should be put on time 
rates without any more attention than is necessary 
to get the jobs done. 

241. The Standardized Operation for the sawyer in 
Table 6, shows an element ' ' Handle and inspect board 
— .406 min." The standard time for this element is 
65 per cent of the whole time of the main cycle. In 
this element the sawyer studies the board, sees what 
defects it contains, decides what defects he must cut 
out entirely and what he can leave either wholly or in 
part to be removed in later operations or to be covered 
by veneers or concealed inside the assembled article, 
and what ones and what numbers of the parts called 



258 APPLYING EFFICIENCY PBINCIPLES 

for by his order lie must cut from tlie board so as to 
waste as little as possible. 

A similar case occurs with men cutting the parts of 
uppers of shoes from tanned hides, whose problem is 
almost exactly the same, substituting hides for boards 
and shoes for furniture. 

Evidently in these cases, standardization is impos- 
sible, and we must rely upon the intelligence of the 
direct worker on the job. To be intelligent he needs 
to know his material, the complete manufacturing 
process, and the demands upon the finished article in 
use. 

There are many cases in which efi&ciency can be ob- 
tained only by the exercise, by the direct workers, of 
skilled judgment, based on wide knowledge. 

242. It is this need of knowledge by direct workers 
which has produced the demand of employers for voca- 
tional education. Here again the Fair Deal requires 
that society, which as the consumer benefits by effi- 
ciency, should, as the government, bear its share of 
the burden. 

243. On vocational education, Kimball says : 

No general solution of this problem has yet been arrived 
at and the entire matter is in a very chaotic state. The fol- 
lowing are the most important methods which are, at present, 
being tried out in various parts of this country: 

(a) New forms of apprenticeship which include academic 
training and which usually cover a narrower range of prac- 
tical work than the old systems, and do not require such a 
long period of apprenticeship. 

(b) Privately endowed or supported trade schools which 
aim to send out men quite completely prepared to enter the 
industries. 

(c) Vocational and trade schools, supported by the State 
or city and forming an integral part of the public school 
system. 



CORKECT METHODS 259 

(d) Part time schools in which the pupil receives his 
training in either a private or public school and obtains the 
practical part in an actual factory, mutual agreements being 
made between the school and the shop so that the student 
alternates between the two under the direction of instruc- 
tors who see that co-ordination of theory and practice is 
effected. 

. . . Fundamentally, however, there is only one kind of 
school whose doors are open to all comers and which is not, 
or at least should not be, dominated by any private interest, 
and that is the public school. In the writer's opinion the 
only general solution of the problem that can ever be reached 
must, therefore, be based upon that system. 

244. Germany lias worked much longer, harder and 
better than we have at this problem; and that is one 
reason for her high efficiency. In Germany even such 
minor trades as horse shoeing and chimney sweeping 
receive attention from the trade schools. The horse 
shoer is taught the anatomy of horses' hoofs by dis- 
section. The chimney sweep is taught the chemistry 
of combustion and the physics of chimney draft. 

245. The examples given of the sawyer, the shoe 
cutter, the horse shoer and the chimney sweep, show 
that their work is based upon a foundation of theory 
which they must know in order to be thoroughly skilled 
and efficient. There are many other workers who are 
in the same situation. 

246. From experience in this country and in Ger- 
many certain facts are now clearly evident. These 
are: — 

That schools alone almost always fail to turn out 
manually skilled and practical workmen; 

That industrial plants can not teach the theory of 
their work nearly so well as the schools can 
do it; 

That both theory and practice are best learned if 



260 APPLYING EFFICIENCY PEINCIPLES 

instruction in the two is given together, with 
care to point out the relation between them; 
That these facts indicate the part time school, in 
combination with instruction in practice and 
manual skill in the industry itself, as the most 
efficient solution of the problem; and 
That even the part time school is most successful 
when it is under governmental authority and 
attendance is compulsory. 
247. The necessity for putting instruction in prac- 
tice and in manual skill into the industrial plant and in 
theory into the schools, is apparent from the consid- 
eration of the question of equipment alone. 

Fitchburg, Massachusetts, in this way teaches 
machine-work, pattern-making, saw-making, drafting, 
iron-molding, tin-fitting, piping, printing, textile and 
office work; in Munich forty-seven trades are taught; 
Milwaukee taught ten trades in 1913-14 and twenty in 
1914-15, and now offers instruction in any trade re- 
quested by twelve persons or more. 

The Committee on Industrial Education of the Na- 
tional Association of Manufacturers says in its report 
of 1915: 

The adaptability of the contimiation (or part time) school 
is invaluable. Witness occasional classes for janitors of 
churches or school houses with splendid results; of Spanish 
for work-a-day correspondents and stenographers; in leather 
work, including cobbling; in delivery work, including the 
care of horses ; in dietaries for poor wives unused to American 
markets, and of course the usual trades in wood, metal, elec- 
tricity, home-making, etc., as the basis of the larger activities. 

Some very simple things must be taught, like fractions to 
those who had them in school but cannot figure in their trades. 

For the public schools to provide the necessary 
equipment to develop manual skill in any such exten- 



COEEECT METHODS 261 

sive list of trades would be enormously expensive and 
would be merely duplicating equipment which is neces- 
sary in industry for regular production. 

On the other hand the employer has no direct use 
for equipment for teaching theory, while the schools 
must have this for other purposes, even if they give 
no vocational instruction. 

248. In education in trades an important difference 
exists between men and women, in that women usually 
remain a few years only in industry. Time is there- 
fore lacking in which to recover the cost of developing 
them to great ability. The Ideal in teaching them 
should be to give them moderate skill quickly. Men 
will repay the necessarily slower development to a 
high degree of skill. 

249. In connection with compulsory attendance of 
young industrial workers for part time in public trade 
schools, the following extract from the 1915 report of 
the Committee on Industrial Education of the Na- 
tional Association of Manufacturers, is of interest : — 

Wherever tried, compulsion finds ready acceptance. Some 
employers complain at first, and in harsh terms, but after 
a little consideration the strongest objector is prone to say, 
*'0h, well, if others are doing it, I am glad to. Something 
of the sort must be done anyhow. ' ' In Wisconsin, under State 
wide compulsion for all cities of more than 5000 population, 
no complaint on any score from employers, parents, labor or 
children has been made to the State Board in fifteen months. 
The Wisconsin experience is still of special value because there 
is state-wide compulsory attendance in cities of 5000 popula- 
tion and over, and at the end of three years the work seems 
to have no essential limitations except those inherent in the 
elements of newness and growth. 

250. In this country the situation which usually con- 
fronts the employer is that of having no trade school 
of any sort to help him in the instruction of his work- 



262 APPLYING EFFICIENCY PKINCIPLES 

ers. Analytical investigation by the methods explained 
elsewhere in these pages will show the amount of 
inefficiency due to ignorance of theory, the feasible 
money saving which can be effected by instruction 
therein, the cost of such instruction, and therefore 
whether it will pay the employer to provide it himself. 

With the diversity that now exists in industries and 
the amount of division of labor commonly practiced, 
instruction in practice and manual skill usually gives 
a worker a special fitness for a particular plant ; and, 
if combined with the application of the Fair Deal and 
Efficiency Eeward, increases the probability of his 
staying there. 

On the other hand, instruction in theory broadens 
one's usefulness, and therefore increases his ability to 
work elsewhere. It is an observed fact that people 
usually develop an affectionate loyalty for the place, 
institution and person from whom they receive instruc- 
tion which interests them, and by which they con- 
sciously benefit. I think that this consideration would 
overbalance that of broader opportunity, so that in- 
struction in theory as well as in practice would tend 
to permanence of personnel, but I have no statistics 
by which to confirm this idea. 

At any rate the probable feeling of the employer 
that, in providing instruction in theory, he is making 
his help more likely to leave him, is a good reason why 
this instruction ought to be provided by Government. 

251. Instruction is helped aU along the line by the 
application of Standards, Planning and Despatching, 
and Eecords because, as is explained in Articles 129, 
131 and 134, the weak points are thus made apparent, 
so that it is known exactly to what men, machines and 
processes special attention should be paid. 



COKEECT METHODS 263 

252. In the usual industrial plant, a foreman nearly 
faints if a skilled man threatens to leave, while a good 
foreman is equally able, by the same threat, to give 
spasms to the factory manager. 

In war, a regiment will lose half its men ; will come 
out with a lieutenant, or even a sergeant, in command, 
and still be able to manoeuvre. 

The reason for the difference is that the military 
organization, being made to be shot at, has for every 
position an understudy who is instantly available; 
while industry, being comparatively free from casual- 
ties, has neglected this need and has in consequence 
developed a weakness which is likely at any time to 
affect it disastrously. 

The strength (amounting almost to indestructabil- 
ity) that a good system of understudies gives to an 
organization, is shown by the example of a regiment 
under fire. The development of understudies is equally 
possible in industry with just as valuable results, and 
is fully practiced by the Pittsburgh and Lake Erie 
railroad, by theatrical companies, and perhaps by 
other American industries. 

The normal understudy is the next subordinate in 
the Chain of Command. This has two advantages: — 

The understudy has opportunities continually to ob- 
serve his superior in the performance of his duties, 
and therefore requires little instruction in them; 

Other persons regard the understudy as the natural 
successor and therefore accord to him temporarily the 
higher position, more willingly than they would to any 
one else. 

Nevertheless industry should not blindly practice 
seniority promotion, but should select the fittest, re- 
gardless of seniority, provided the superiority of the 



264 APPLYING EFFICIENCY PEINCIPLES 

one selected is more than sufficient to compensate for 
the loss of the advantages above stated. 

If the plant has an employment supervisor, the se- 
lection of understudies is properly his job, subject to 
advice and approval the same as in filling a position. 
See Articles 44 and 45. 

Whoever is selected as the understudy ought to be 
definitely and publicly kno^n as such. 

The understudy while acting in the higher position 
should confine himself strictly to routine matters. For 
example, a straw boss acting temporarily as foreman, 
would be expected to do nothing more than carry on 
the work in process, and should not even be allowed 
to make requisition for the purchase of new equipment 
or otherwise to disturb any of the permanent condi- 
tions of the department. 

If the activities of the understudy are thus limited, 
and his regular work enables him to observe the work 
of the higher position, about all the additional instruc- 
tion needed is fairly frequent practice in its routine 
duties. This can often be given with benefit in other 
directions. For example, some plants hold fore- 
man's meetings out of working hours and require the 
foremen to attend these without additional compensa- 
tion. This is a hardship to the foremen and an un- 
necessary one because, if a sub-foreman, straw-boss, 
or leading workman were selected as understudy to 
every foreman, these understudies could perfectly well 
relieve the foremen temporarily, and by so doing they 
would gain experience which would form them into a 
reserve from which foremanships could be filled on 
short notice. 

253. Kimball summarizes the situation with refer- 
ence to Correct Methods and Instruction as follows : — 



CORBECT METHODS 265 

It pays to ieach men the best methods by which work can 
be done. This is in strict accord with all human experience ; 
yet the backward state of the educational side of factory 
management is startling. Even the much lauded old appren- 
ticeship systems were not, as a rule, educational in a true 
sense. The apprentice was given an opportunity to learn by 
observation and absorption, but was rarely taught. Is it any 
wonder that the accumulated errors and wasteful methods of 
the trades have persisted? If time and motion study have 
done no other service than to call attention to this fact they 
have rendered a great service. It is rapidly becoming recog- 
nized that increased refinement in methods and higher re- 
quirements for the worker can be met only when coupled with 
proper methods of instruction. It is not sufficient to set 
standards that only a few men can reach to the arbitrary 
exclusion of all others. Every man should be educated indus- 
trially to his highest capacity, in the work for which he is best 
fitted, and every man should be given an opportunity to pro- 
duce to the best of his ability and rewarded accordingly. This 
implies not only a changed point of view on the part of our 
public schools, but on the part of factory management also. 
The work of Mr. H. L. Gantt in training men not only in 
skill, but in habits of industry, is worthy of special attention. 
The setting of standards of performance means very little, 
after all, unless these standards are high. And if they are 
high they can be reached by the majority of workmen only 
after careful training and preparation. 



Chaptek XIT 
THE FAIR DEAL 

254. 

afE of my most valued friends began work when 
about fifteen years old as an apprentice in a 
machine shop. One of the most remarkable things that 
I know about him is that, as a young boy, he had the 
moral courage, determination, and ambition to set him- 
self to study and learn, not only the practice but also 
the theory of his work. 

He kept his books in his tool locker, and when he 
had a long cut going on a machine he would get out 
one of his books and study. He saved his money and 
took a course in an engineering college, and has since 
had a varied but ever upward career; having been in 
turn a designing draftsman, a professor in a great 
engineering college, and manager of a large plant, 
until now he enjoys a national reputation and is filling 
with success and distinction a position of high impor- 
tance. 

I mention these facts to show that experience has 
qualified him to be a good judge of human nature in 
industry from the top to the bottom and in all its 
varieties. 

He said to me once, ''These people who are always 
talking about the working man as if he were some 

266 



THE FAIR DEAL 267 

kind of a bug, to be caught with a net and examined 
under a microscope, make me tired. The working man 
is just a human being hke anybody else. If anyone 
wants to know how the working man would feel about 
anything, let him ask himself, ' How would I feel about 
itr " 

255. Gantt says : 

It has become an axiom in the commercial world that in 
the long run those transactions most promote prosperity which 
are advantageous alike to buyer and seller. It is coming to 
be realized in the industrial world that the same thing is 
true regarding the arrangements between employer and em- 
ployees, and that no arrangement is permanent that is not 
regarded hy both as being beneficial. In other words the 
only healthy industrial condition is that in which the em- 
ployer has the best men available for his work, and the 
workman feels that his labor is being sold for the highest 
market price. The employer who insists on more service than 
he pays for, and the employee who demands excessive wages 
for his work, both lose in the long run. The former worries 
continually about how to manage dissatisfied workmen, who 
are continually on the verge of a strike, and in dull times the 
latter lives in constant dread that his employer may no longer 
be able to continue business, and he may be out of work. In 
other words, unless efficient work goes with high wages, the 
result is apt to be disastrous to both employer and employee. 

Gantt 's statement may be summarized as a demand 
for the Fair Deal ; and the Fair Deal both ways, from 
the employer toward the employee, and from the em- 
ployee toward the employer. 

256. In practice we find, on the part of the employer, 
everything from the most cruel exploitation, which is 
ethically little, if any, better, than holding one's fellow 
beings in slavery, to outright paternalism ; and, on the 
part of the employee, everything from the most arbi- 
trary and tyrannical interference with the management 
of the business, to abject submission to sweating. 



268 APPLYING EFFICIENCY PEINCIPLES 

257. Civilization learned a good while ago that slave 
labor did not pay, and the general experience of effi- 
ciency engineers is that low wages mean high costs of 
production. 

On the other hand some of the concerns which have 
.done the most in so-called '''welfare work" for their 
employees have had the most trouble with them. 

Suppose we apply to this puzzling situation my 
friend's test question, ''How would I feel about it?" 
and put ourselves in the worker's place. 

258. Suppose now that our pay envelope, hitherto 
containing ten dollars a week, we find to contain twelve. 
How do we feel about that? 

During recent winter mornings, I often noticed a 
certain undersized working girl on her way to the fac- 
tory. She had several blocks to walk after she left the 
car, and the weather was often sloppy. I noticed that 
she never wore rubbers. In bad weather that meant 
wet feet by the time she got to work. A dollar more 
in the pay envelope would have meant to that girl a 
pair of good tight rubbers, dry feet through the work- 
ing day, freedom from colds and better health all 
around. If she had had the extra dollar soon enough 
to have allowed her to have more nourishing food 
earlier in life, probably she would have grown bigger. 
More money in the pay envelope means just that — the 
provision of things that it is painful and even danger- 
ous to do without, but which one cannot have if he is 
limited to a bare existence, and for the lack of which 
he finally pays the penalty with life itself. 

Does the employee object to more pay? On the con- 
trary he will work in dust and dirt that will kill him in 
a few years, will engage to go to the North Pole or to 
take photographs on the firing line, or will work in a 



THE FAIR DEAL 269 

coal mine where other men have perished by the hun- 
dred in one disaster ; all for more pay. 

259. Suppose that our employer puts in a first aid 
room and employs a nurse in constant attendance. 
Last year we cut a finger. It did not amount to much 
and we gave it no attention for several days. Then 
instead of healing it became sorer and sorer. We do 
not know anything about infection ; but we know that 
before we got through with it we were carrying that 
arm in a sling, that it hurt so much that we could not 
sleep at night, and that for several weeks we were un- 
able to work. Now we get another cut. Our foreman 
sees it bleeding and at once sends us to the first aid 
room. The nurse cleanses the wound, dresses it and 
tells us to come back the next day for a new dressing. 
In two or three days the wound is healed, we have lost 
no sleep and we have not had to lay off with an arm in 
a sling. 

What is our attitude toward the nurse and the first 
aid? Has it decreased our wages'? Compared with 
our previous experience it has evidently increased 
them. Probably we do not think it out any further 
than that; but if we do, we remember that when we 
came back last year, we found our machine in bad con- 
dition and a lot of spoiled work around due to the in- 
competence of the men who had been hurriedly hired 
off the street to take our places. We perhaps realize 
that they cost the employer a good lot of money beside 
their wages, and that avoiding that kind of thing saves 
him more than enough to pay for prompt attention to 
our injuries, and therefore increases rather than de- 
creases his ability to pay our wages. Do we object to 
the nurse and the first aid room? Answer it for your- 
self. 



270 APPLYING EFFICIENCY PEINCIPLES 

260. Suppose that our employer hires a band to play 
in the shop during the noon hour. The men like the 
music but some workers remember that last Sunday 
their wives wanted them to take them and the babies 
to the park to hear the music, and they did not have 
the money. What do they think? Very likely, ''Give 
us our share of what the band costs, in our wages, and 
let us spend it to suit ourselves. ' ' 

Or suppose we are employed by a devout adherent 
of a different religious persuasion from our own. He 
employs a welfare worker who visits our homes and 
leaves tracts in our own language for our families to 
read. How do we like that? 

261. What then constitutes the Fair Deal? 

Two great teachers have independently given almost 
the same answer. Buddha taught his followers to do 
nothing to others that they would not be willing to 
have others do to them. Christ stated the same thing 
in positive and therefore stronger form, "All things 
whatsoever ye would that men should do to you, do ye 
even so to them. ' ' 

Their generalizations are perfect and, like all per- 
fect generalizations, difficult to apply in the particular 
case. Any man needs a sense of justice, tempered by 
human sympathy and kindness, checked by Higher 
Common Sense, and guided by Competent Counsel, 
always to answer rightly. 

However some notes from experience in industrial 
management may be helpful. 

262. In the first place, wages should be up to the 
market rate. Wages are really the crux of the whole 
matter. If the pay is good, employees are likely to 
overlook other defects in their condition; but poor 
wages are likely to cause such a feeling of irritation 



THE FAIR DEAL 271 

that benefits in other directions will be regarded as a 
cheating substitute. 

Bonus and other additions to the market rate of 
wages come under Efficiency Keward, not under the 
Fair Deal. 

263. In the second place, conditions should be as safe 
and sanitary as is commercially possible. This means 
more than is ordinarily supposed. The Pittsburgh and 
Lake Erie Kailroad, a shining example of efficiency and 
low operating costs, in its yards at McKee's Rocks, 
has a white blacksmith shop whose interior is of the 
color of fresh whitewash ; but it is because the strong 
blast in the forges and the hoods over them cause the 
smoke and gases to pass off at once through the stacks, 
not because of frequent whitewashing, that the place 
stays white. 

The Pittsburgh and Lake Erie finds that, paying the 
market rate of wages, as it does, it can have the pick 
of blacksmiths and their helpers, partly because of the 
better health which their men enjoy from working in 
air fit to breathe, and partly because of the courteous 
treatment that the foreman gives his men. 

264. In the third place, there should be human kind- 
ness; recognition that employees are sentient beings 
and not mere machines of flesh and blood. Even the 
horse works better if he is spoken to by his name and 
in a kindly tone. 

If an employer buys labor merely as a commodity, 
with no more feeling than he buys coal, he can expect 
to get just as much loyalty from his workers as he 
would from a coal pile with some sticks of dynamite 
scattered through it. 

Repeatedly in these articles attention is called to the 
importance of team work. No one would expect team 



272 APPLYING EFFICIENCY PEINCIPLES 

work from an athletic organization whose members 
were not loyal to each other and to the management. 
Nothing different can be expected from an industrial 
organization. 

Human nature is so social that we involuntarily 
feel a bond of sympathy with a fellow townsman or 
with a neighbor. If this natural social loyalty is not 
developed among those who work in the same plant, 
one element of eflEiciency is therein conspicuously neg- 
lected. Whatever methods and devices are locally used 
to foster this loyalty, it is fundamentally a matter of 
the spirit. 

No matter what systems may be followed, in thou- 
sands of ways the inner spirit of the management will 
leak through, and will be felt by the workers ; and they 
will ultimately reciprocate, whether it be kindly, in- 
different, or hostile. 

265. On the other hand, experience in efficiency work 
shows that one of the surest means of winning the em- 
ployees ' confidence in betterment measures, is to ex- 
plain to them that such measures pay the employer, 
and how and why. If they are convinced of this, the 
sting of patronage is taken out, and the workers feel 
that the improvements are undertaken on a business 
basis, in good faith, and will be permanent. 

266. This may be summarized by saying that 
throughout betterment work a spirit of enlightened 
altruism and one of enlightened selfishness must meet 
and be perfectly reconciled, as is indeed the inevitable 
outcome if both are perfectly enlightened. 

267. The fourth element of the Fair Deal is abso- 
lutely dependent upon the employer. This is the as- 
signment of workers to the tasks for which they are 
fit. The Emerson Company has probably done more 



THE FAIR DEAL 273 

work along this line than any other general betterment 
practitioner, and their experience indicates that over 
half of all industrial workers are in work for which 
they are less suited than they are for other work in 
the same plants. 

An article entitled "Ford's Material and Labor 
Systems" in the Engineering Magazine for May, 1914, 
states that Ford is giving particular attention in his 
plants to finding workers who have abilities other than 
for the jobs on which they are employed, and to con- 
necting them with the work for which they are most 
fit. The writer cites some very interesting cases ; for 
example, a skilled Swiss watch maker, who was found 
running a drill press. 

The means of doing this important work are stated 
in Articles 44, 45, 47 and 48. 

Why does not the worker himself see to it that he 
gets work for which he is fitted? He cannot. He does 
not express himself. Silence he regards (and with 
considerable reason) as his safest policy. He will not 
tell you about himself or anything else ordinarily, un- 
less you not only invite, but considerably encourage 
him to do so. Any man who has ever looked for a job 
will remember that his range of choice was very lim- 
ited, and that he took the best that he could get. Once 
started along a certain line, one soon develops a little 
skill which increases his earning power in it and makes 
him reluctant to start over at beginner's wages in 
another line, even though he may feel that ultimately 
he would do better in it. He gets into a rut, and it is 
very hard for him to get out ; the harder, the less his 
resources. 

268. A necessary condition for the successful appli- 
cation of the Fair Deal is that Higher Common Sense 



274 APPLYING EFFICIENCY PEINCIPLES 

and Competent Counsel should be used to determine 
what is fair. 

Eecently I had a conference with an industrial man- 
ager whose directors prohibit time studies in their 
plants, refuse to use any methods of payment except 
time rates and piece rates, and expect their manager 
to increase the efficiency. 

In this dilemma he had recourse to records of past 
performance as his only means of setting standards, 
and had used these as the basis of piece rates, with 
guaranteed minimum time rates. 

The direct workers had just begun to take hold of 
the piece rates, and the manager showed me records 
of several earnings of twice the man's regular daily 
wage, and one of 5,17 times that wage. 

Unless the directors act with an enlightenment not 
at all to be expected from their previous unreason, 
their next step, as soon as they learn of these big 
piece-rate earnings, will be to force the manager to 
cut the rates, although the rates as they stand decrease 
their previous labor costs. 

That is universal experience where standards are 
set without previous adequate determination, not of 
what has been done but what can he done. The work- 
ers first hang back, then discover the possibilities of 
big earnings and go ahead and make them. Then the 
employer gets scared at the wages he is paying and 
makes the standards more severe. The workers, find- 
ing that they will be allowed to earn only so much any 
way, refuse to try for anything above that amount. 

No effort toward a more equitable division of wealth 
produced, between direct and indirect producers, can 
be permanently successful unless results in the long 
run are evidently substantially fair to both parties; 



THE FAIE DEAL 275 

and this can be accomplished only by basing the divi- 
sion upon correct Standards. 

269. It is necessary to emphasize the Fair Deal from 
the employer to the employee more than that in the 
other direction, because the employer has the advan- 
tage of position. He needs the employee in order to 
make money, the employee needs him in order to live. 
This fact gives the employer a strength which his em- 
ployees, even when combined in the strongest union, 
find it difficult and often impossible to resist. 

The weak must adapt their conduct to that of the 
strong. If the strong desire to oppress, the weak have 
no safety except in combining to fight in self defence. 
Nevertheless, war measures are very heavy burdens; 
therefore, no nation, union or individual will carry 
them permanently, except as a necessary protection 
against a recognized danger. 

Therefore only the strong who need not fear can 
lead off in the practice of the Fair Deal ; but the weak, 
perhaps slowly, reluctantly, and timidly, but inevita- 
bly, must follow their lead. 

270. This of course is speaking of men and women 
in mass. It is to be feared that in any considerable 
number of people, at least a few abnormal individuals 
will not respond but will maintain a hostile attitude. 
These people are always a source of danger. Causes 
of irritation can never be absolutely removed from the 
mass, and the least of these finds in the malcontents in- 
fected spots from which trouble can spread. Probably 
these people are curable ; but the industrial plant can- 
not be expected to be a psychopathic hospital. For 
the industrial manager the only practical remedy is 
prompt and adequate Discipline. 

271. I once took part in an extensive preliminary 



276 APPLYING EFFICIENCY PRINCIPLES 

investigation in a plant which paid piece rates almost 
exclusively, and in which those rates had been cut and 
recut. 

The feeling of the direct workers toward the man- 
agement was very bitter, and their distrust so great 
that the investigators did not dare to show a stop 
watch in the work rooms, and the appearance of any 
of us was the signal for all to slow down. 

Where such a condition exists, it is wise to work at 
first on other things than labor; and the management 
must meanwhile experience a change of heart and con- 
vince the workers of it by bringing forth fruits meet 
for repentance. In other words the evident applica- 
tion of the Fair Deal must, in such a case, be the first 
of all betterment measures to be applied to labor. 

Even then one must not expect to gain the confidence 
of the workers quickly, no matter how benevolent his 
intentions may be. If toward the close of the deer 
hunting season, one were to go into the woods with a 
bag of rock salt, and the best intentions in the world 
to give a lump to every deer, he probably would not 
get within a mile of one of them. 

Evidently nothing but time and patience will over- 
come these difficulties. Failure may be caused by try- 
ing to cram improvements down the throat of the or- 
ganization faster than the latter can swallow them. 

272. However, the benefits of efficiency, so greatly to 
be desired by all parties, will be much more quickly ob- 
tained if employees also realize that, to secure them, 
they, too, must practice the Fair Deal. 

As Gantt says : 

Increase in efficiency makes the payment of high wages 
possible, and it may be added that without efficient labor, high 
wages cannot be paid indefinitely, for every wasteful oper- 



THE FAIE DEAL 277 

ation, every mistake, every useless move has to be paid for 
by somebody, and in the long run the workman has to pay 
his share. 

273. Nor can the maximum efficiency be attained un- 
less society, the third party in all this, gives a Fair 
Deal to both employers and employed and does its 
share of the work in ways that are stated elsewhere in 
these articles. 

The Fair Deal comes to the front in the matter of 
promotions. How often, when an efficient man in a 
lower position is suggested as the proper person for 
promotion to a higher one, do we hear, ''He's a very 
good man where he is, let him stay there!" If the 
man thus unfairly treated were a mere machine, with- 
out mind to know and feel the injustice, this might be 
sensible. 

Efficient work in one position is in itself a claim on 
advancement, which can be nullified only by evident 
unfitness for the higher position — either absolute un- 
fitness, or unfitness relative to some other candidate. 

If Standards and Records have been applied and if 
the fittest men as shown by them have been developed 
as understudies, as suggested in Article 252, almost 
every vacancy will be filled automatically, by the pro- 
motion of the understudy. 



Chaptee XIII 
DISCIPLINE 

274. 

WHATEVEE may go into the superstructure of a 
building — wood, paper, glass, and cloth — noth- 
ing but stone and steel will do for the foundation. 

With whatever kindliness the outward manifesta- 
tions of an organization may touch the individual, 
strength to achieve is lacking, unless there is a stone 
and steel foundation of obedience to orders. 

Yet one would not have to search far to find Amer- 
ican plants in which implicit obedience to proper au- 
thority is not even expected. 

To some extent this is due to a lack of backbone on 
the part of the management, as a result of which it 
weakens at the least threat of difficulty. 

In any community the maintenance of proper Ideals 
occasionally requires the exemplary punishment of 
those who violate them ; and the industrial manager, as 
much as any other in authority, must expect to prac- 
tice this, if he is to achieve high efficiency. 

275. One reason why military discipline can reach 
with such strictness into the smallest details of a sol- 
dier's life, is that the military commander can inflict 
penalties of all grades of severity, suited to all grades 
of offences. It would be absurd to courtmartial a 

278 



DISCIPLINE 



279 



soldier because lie came to parade in a dirty umform, 
and it would destroy discipline to do anything of the 
sort. Martinets are not good disciplinarians. A brief 
confinement in the guard house, or the temporary loss 
of some minor privilege, deals effectively, because ap- 
propriately, with a minor offence. 

The industrial manager is often hampered by lack of 
any penalty except discharge. As this is obviously too 
severe for small offences, and has a good deal of a 
back kick to it against the business itself, a foreman 
or other executive is reluctant to apply it, and in pref- 
erence is apt to tolerate a good deal of disrespect, un- 
tidiness, and other things that ought never to be al- 
lowed. 

In the theatre cash fines of varying severity are 
successfully used to maintain discipline. They would 
doubtless be equally effective elsewhere; but there 
are obvious difficulties in their general application to 
industry, one of the most serious of which is the likeli- 
hood of their being abused. 

Docking an employee's pay for absence is simply 
not paying for value not received, and therefore is not 
a punitive fine. 

A lay-off without pay, for a length of time propor- 
tioned to the gravity of the offence, is commonly prac- 
ticed, and is effective ; but where there is considerable 
division of labor, the absence of a worker may be so 
troublesome as to make the executives over-reluctant 
to enforce this penalty. 

The obvious remedy for this condition is the develop- 
ment of understudies, which is discussed in Articles 44 
and 252. 

A demerit system immediately provides small change 
in penalties. Such a system is a kind of book-keeping 



280 APPLYING EFFICIENCY PRINCIPLES 

applied to conduct, whereby debit entries are recorded 
until they reach an amount large enough to be worth 
collecting by the infliction of a penalty appropriate to 
the sum of the offences. By this means offences too 
small to be punished by themselves, collectively bring 
upon the offender an appreciable punishment. 

Obviously much of the effect of a demerit system is 
dependent upon its being publicly known that such and 
such an offence will bring so many demerits and that, 
as surely as one receives a certain number of demerits 
within a given time, he will suffer a certain penalty. 

It would require considerable tact to introduce a 
demerit system with published information of recog- 
nized offences, demerits due to each, and standard pun- 
ishments, without arousing perhaps resentment and 
almost certainly ridicule. 

The same results can be accomplished without these 
disadvantages by the installation of the records of em- 
ployees suggested in Articles 47 and 138, including re- 
ports by executives to the employment supervisor on 
their subordinates. A man might be disrespectful to 
his foreman one week, spit tobacco juice all over his 
machine the second week, and knock over a truck load 
of work in process the third week, and the foreman's 
resentment of each might be so much abated before 
the next occurred, that he would fail to punish any of 
them; but if he had to report on the man every week 
to the employment supervisor and his successive state- 
ments ran "fresh," ''dirty," and ''careless," and the 
employment supervisor was onto his job, something 
would be pretty likely to happen to the man. If this 
should occur after Records, Standards, and Planning 
and Despatching had been introduced, and the man's 
record showed that he had been from two to ten min- 



DISCIPLINE 281 

Tites late every morning and that Ms efSciency was only 
75 per cent, his connection with the concern would be 
likely to end. 

276. A friend has told me of a recent visit to the 
employment department of the Ford Motor Company 
during which a workman was called in to answer to 
an inspector's report that he did not properly support 
his family. After a hearing, the employment super- 
visor suspended him from the bonus class until he 
should take proper care of his family. Here we have a 
man brought up for something which most employers 
would consider as none of their business, and accept- 
ing as punishment a drastic cut in his wages, which 
would cause almost any workman to quit his job on the 
spot. 

Why could Ford do this and why should the man 
stand it? Because the man valued his job; and he 
valued it because it was valuable. Even under the cut, 
he probably earned as much at the Ford plant as he 
could earn anywhere else ; and he knew that by doing 
his duty he could get back to five dollars a day. 

Obviously, in order that the employer may be able to 
punish effectively, he must cause his employees to 
value their jobs, and the only way to do that is to 
make the jobs valuable. At this point Discipline con- 
nects closely with Adaptation of Conditions (see Arti- 
cle 50), the Fair Deal and Efficiency Reward. 

277. Captain Marryatt's stories of the British Navy 
of one hundred years ago represent the officer on watch 
as peremptorily ordering the immediate punishment of 
offenders, without any reference to higher authority. 
Substantially the same condition existed in the Amer- 
ican Navy at that time. Naval discipline has always 
been renowned and is better now than it was then. One 



282 APPLYING EFFICIENCY PRINCIPLES 

of the causes of its improvement, in the American 
Navy at least, is that the power to punish has been 
taken away from the officer immediately in contact with 
the offence and the offender, that subordinate officers 
can only report offences to the captain, that the latter 
can inflict only minor punishments, and that severe 
punishments can be inflicted only after trial and sen- 
tence by a court martial. 

In industrial discipline, we are still in the main 
where the American Navy was one hundred years ago, 
in that the foreman still has absolute disciplinary 
power, even to discharge. 

Discipline can not be permanently maintained, unless 
it usually achieves substantial justice ; that is, the Fair 
Deal. Common Sense indicates that the official against 
whose authority an offence is committed is more or 
less affronted by it, and is not in a mental condition fit 
to judge the case ; and that all serious cases therefore 
ought to be reviewed by some one removed from such 
influences and capable of a judicial and wholly imper- 
sonal attitude. 

The employment supervisor is the natural person 
for this function. His duties in this respect are dis- 
cussed in Articles 45, 46, 47 and 48. 

At the same time, in an industrial plant, the imme- 
diate object of discipline is primarily to enforce proper 
authority and to keep the work going, and secondarily 
to give a Fair Deal. In other words, a workman ac- 
cused by a foreman should be assumed to be guilty un- 
til he proves that he is innocent. In reviewing disci- 
plinary actions, the employment supervisor therefore 
works under certain restrictions which should be no- 
ticed in the reference above given. However, arbi- 
trary and unfair conduct of an executive ought as 



DISCIPLINE 283 

soon as possible to bring down Discipline on him, on 
which see Article 46. 

278. One violation of discipline is so commonly prac- 
ticed by higher industrial officers that it must be no- 
ticed. Many superintendents and managers will go 
into a shop and deal directly with the workmen, often 
giving them orders of which the foreman has no knowl- 
edge, or even reprimanding the direct workers for do- 
ing what the foreman has told them to do. This sort 
of thing diminishes the foreman's authority and cor- 
respondingly increases his difficulties. Only in an 
emergency should orders be given, except through the 
Chain of Command ; and where such emergency orders 
are given, the intervening members of the chain should 
be notified as soon as possible. 

Adherence to the recognized good practice of avoid- 
ing oral orders, and giving them, if possible, only in 
writing, will remove most of this difficulty. 

279. While occasional punishment may be as neces- 
sary as a steel and stone foundation, discipline that is 
nothing but punishment, is like hving in the cellar. 
Life above ground, where there is more light and air, 
is both pleasanter and healthier. In any efficient or- 
ganization, the people think as seldom of punishment 
as any well regulated family does of the coal hole. 

280. It is possible even in a prison to maintain dis- 
cipline that is at once effective and loyally supported 
by the general mass of those subject to it. This is so 
much more possible in an industrial plant, that any 
concern that does not have it ought to give its internal 
affairs very serious attention. It would be well to 
read again at this point, Article 32. 

The effect of instruction in producing loyalty is 
noted in Article 250. Hunter says : 



284 APPLYING EFFICIENCY PBINCIPLES 

How about loyalty? When a boy starts an apprenticeship 
course and grows up he will certainly be loyal. If he serves 
his time with Brown & Sharpe, for instance, later when he 
goes out he will talk for Brown & Sharpe and the things he 
saw there. We have found this to be true. 

The reason for this seems to be that through in- 
struction the person is given skill, that in the exercise 
of this skill he finds pleasure, and that this pleasure 
causes affection toward the place, institution, and per- 
son to whom the skill is due. 

H. E. Miles, reporting as Chairman of the Commit- 
tee on Industrial Education of the National Associa- 
tion of Manufacturers at the 1915 meeting, said: 

Do we wonder that our workers are not more happy 1 Were 
you ever happy in doing a thing that you did not know how 
to do ? Were you ever happy in doing a thing that you only 
half knew how to do? There is only one way to make work- 
ing people happy and that is to make the work they do intelli- 
gent. The minute you make work intelligent and make a 
worker good and expert at his job you will have no trouble 
in filling the shops with happy workers. 

Adaptation of Conditions and Work to Each Other, 
including the placing of the worker in a job for which 
he is naturally fit, should be noted as a cause of loyalty. 
See Article 50. The astonishing number of human 
misfits in industry, as mentioned in Article 267, is a 
probable and removable cause of unhappiness, disloy- 
alty and poor discipline. 

The effect of the Fair Deal in producing loyalty is 
noted in Articles 264, 265 and 266. When all these 
causes of loyalty have been put into effect, the sub- 
structure of discipline is so covered over by the more 
attractive superstructure, that loyalty, not fear of pun- 
ishment, becomes the dominant feature of discipline. 



DISCIPLINE 285 

Obedience then springs not from fear, but from loy- 
alty ; and while fear can usually compel a perfunctory 
obedience, zeal and willingness, and that team work 
whose importance has been so often emphasized, spring 
only from loyalty. 



Chapter XIV 
EFFICIENCY EEWARD 

281. 

IN all ages soldiers have carried efficiency to that ex- 
treme of self-devotion in which a man exposes him- 
self to death in its most horrible forms, for rewards 
without material value. Many a man has risked his 
life, and lost it too, in the hope of being mentioned in 
general orders. 

Why is it that an intangible and merely sentimental 
reward is effective under such extreme conditions! 

Neither the commander-in-chief who bestows the re- 
ward nor the country which he represents, profits in 
any selfish way by the act for which the soldier is re- 
warded. On the contrary, when the soldier devotes 
himself for his fatherland, he believes that all whom 
that fatherland includes are under equal obligation to 
practice the same devotion to the limit of their oppor- 
tunities. 

Where all sacrifice and suffer together for the com- 
mon good, those who excel may be effectively rewarded 
by honors of no intrinsic value. 

282. Where many toil for the profit of a few, those 
few cannot effectively reward efficiency except by sub- 
stantial material value. 

283. Nevertheless sentimental rewards are practiced 

286 



EFFICIENCY BEWARD 287 

in industry. Workmen have been divided into gangs 
according to their national and other rivalries, one 
gang of Italians and one of Slavs, for example; and 
the flag of the gang that did the biggest day's work 
has been floated over them both on the next day. Eec- 
ords of efficiency have been posted, where all could see 
and admire or condemn. The picture of the best sales- 
man has been published in the house paper with a com- 
mendatory notice. ' ' Banner Section, ' ' or words to that 
effect, have been posted in gold letters six inches high 
on the tool house of the best section gang, for the edifi- 
cation of passengers on the railroad. 

These things have their value in industry, only if 
they are used as mere accompaniments — spice and sea- 
soning, as it were — to efficiency rewards of substantial 
value. It would be well in this connection to reread 
Articles 31 and 32. 

284. In industry, the final measure of efficiency is 
the dollar. No supposed improvement which does not 
finally result in a lowering of unit cost really increases 
efficiency. Therefore before any form of efficiency re- 
ward is adopted, its effect upon cost should be inves- 
tigated. A hypothetical example of this is given in 
Table 15 under *' Labor," and is explained in Article 
376. 

285. Referring to Figure 1, Article 66, Diagram of 
Typical Organization, team work is of supreme im- 
portance in the case of the Financial Manager, the 
Sales Manager, the Factory Manager and the Chief 
of Staff. For example, we all know the pressure on 
the sales department for minor variations in the prod- 
uct, and the high factory costs which result from yield- 
ing to this pressure. On the other hand a lowering of 
quality by the factory might result in a considerable 



288 APPLYIIvrG EFFICIEN-CY PKINCIPLES 

decrease of factory cost but also in a loss of reputation 
which would greatly decrease sales. Therefore, the 
efficiency reward of these men ought to be such as will 
cause them to work for the business as a whole, as 
much as for their own branches ; and for this purpose 
there is probably nothing more effective than outright 
profit-sharing. 

Profit-sharing has the further advantage that it is 
not affected by errors in setting standards ; for exam- 
ple, referring to Table 7, Article 184, the appropria- 
tions and standard allotments. 

Profit-sharing also has the advantage that it can be 
started immediately; and, for reasons that are stated 
in Article 184, it is desirable that efficiency reward for 
the executives should be started as early as possible. 
As a matter of Fair Deal, the executives are entitled to 
an efficiency reward, for any efficiency that is attained 
must be due, in a large measure, to their sympathy 
with the work and their labors in advancing it. 

286. As we go down the Chain of Command, profit- 
sharing at every successive link loses in effectiveness 
as an efficiency reward, until, when we reach the direct 
workers, it is practically valueless. 

The reasons for this have been so fully explained in 
the general literature of the subject that I shall here 
only summarize them by saying that there is no real 
connection between the profits of the business and the 
efficiency of the individual worker at the bench or the 
machine, and that he knows this perfectly well. 

Even if this were not true, profit-sharing as an effi- 
ciency reward is in time too remote from the act re- 
warded, to be effective. My own experience with ma- 
chine operators is that, if even four weeks intervene 
between the work and the reward, they do not mentally 



EFFICIENCY REWAED 289 

appreciate the connection between their efficiency and 
the reward that is paid them. My experience of this 
matter has not been sufficient to warrant a generaliza- 
tion as to the time interval allowable ; but certainly all 
experience has shown that, with men of this class, both 
rewards and punishments must follow very closely 
upon the act, to be fully effective in determining mo- 
tives for future conduct. 

287. We may therefore say that, for the men at the 
head of the staff and of the several branches of the 
line, outright profit-sharing is the proper efficiency 
reward ; with the direct workers, profit-sharing is use- 
less, and their efficiency reward should be based on 
their own efficiency and should follow as closely as 
practicable thereon; and that, in between, profit-shar- 
ing, diminishing with every link that we go down in 
the Chain of Command, should combine with other 
efficiency rewards based on efficiency for which the in- 
dividual is personally responsible, and increasing in 
relative importance with every link that we go down. 

288. A superintendent or foreman might therefore 
receive several efficiency rewards. For example, refer- 
ring to Table 7, page 200, the foreman of Department 
1 might first have a small share in profits. He ought 
to get the bulk of his efficiency reward for reduction of 
costs over which he has large, and possibly complete, 
control. The reduction of direct labor for his depart- 
ment from $75 000 to $63 000 per year is very largely 
dependent upon him. His department being one of 
first operation, its share of the annual appropriation of 
$260 000 for direct materials will perhaps be $200 000, 
so that his standard allotment for direct materials 
would be $180 000 per year. It might be possible also 
to segregate the power consumption for his depart- 



290 APPLYING EFFICIENCY PRINCIPLES 

ment and give him an appropriation and standard 
allotment for it. See Article 129. 

It may be possible to give him appropriations and 
standard allotments on other indirect expenses. The 
foreman ought to get the bulk of his efficiency reward 
for such definite reductions of expenses. This will 
probably be some form of commission on the amount 
by which he reduces his actual expenses below their 
respective appropriations. 

Since fluctuation of production is likely to occur and 
produce corresponding fluctuations of the appropria- 
tions and allotments, it is convenient as soon as effi- 
ciency rewards for the direct workers have been in- 
stalled, to put the foreman's commissions on savings 
in direct labor and direct material into the form of 
percentages on efficiency rewards earned on direct 
labor and direct materials by the direct workers of his 
department, since these last will depend directly upon 
the volume of production as well as upon the efficiency, 
that is, they will depend upon the savings. A foreman 
may also receive other special forms of efficiency re- 
ward. An example of this is given in Article 303. 

One should not tie himself down to any cut and dried 
rules for the efficiency rewards of executives of the 
grade of superintendents and foremen, either line or 
staff, because their rewards should be worked out ac- 
cording to circumstances, so as to induce the highest 
efficiency in the case in hand. 

However, on starting any form of efficiency reward 
to such an executive, it is necessary to look ahead as 
far as possible to all the efficiency rewards that he is 
to have, in order to design them so that their total 
amount will be reasonable and their proportions to 
each other such as to produce efficient results. 



EFFICIENCY BEWARD 291 

289. In practice, the proportion of efficiency reward 
to time rate for executives varies enormously. With 
all efficiency rewards in operation, and efficiency at 100 
per cent, the minimum ought to approximate 20 per 
cent of time rate. According to a statement in the New 
York Herald for September 27th, 1915, the efficiency 
rewards of the fourteen managing directors of the 
Bethlehem Steel Company vary from 1800 per cent 
to 18 900 per cent of their time rates. It may be profit- 
able to pay anything above even those figures, accord- 
ing to the amount of savings in sight and the difficulty 
of obtaining them. 

290. In considering the subject of efficiency reward 
for direct workers, it should be remembered that the 
employer really buys two things from the worker ; first, 
an option on the latter 's time, and, secondly, his out- 
put. The reality of the option on time is apparent 
whether we look at it from the stand-point of the em- 
ployer or the employee. The former, even if he is pay- 
ing piece rates only, objects to absence, and rightly so, 
since it disturbs the balance of his force on the various 
operations. The employee, if he is sent home for lack 
of work, will hardly find it possible to sell this brief 
portion of his time. The Fair Deal, therefore, requires 
that as a minimum compensation, the worker should be 
paid for his time at the market rate of wages. In Fig- 
ure 6 (page 292), time rate would be represented by 
the straight line OA passing through the origin;. and 
total earnings should never fall below this, except as 
punishment for a breach of discipline. See Articles 276 
and 277. Compensation on output, or piece rate, be- 
ing constant for any given job and independent of time 
worked, will be represented in Figure 6 by the straight 
line BC, parallel to the axis of time. A fair piece rate 



292 



APPLYING EFFICIENCY PRINCIPLES 



evidently ought to be sucli that earnings at 100 per 
cent efficiency would be the same by either method of 
payment. One hundred per cent of efficiency should 
therefore occur at D, the intersection of time rate and 
piece rate. A better than average worker who could 
do the job in less time than BD, ought not to have his 
compensation thereby diminished. That is, he ought 
to be paid the piece rate and receive the full compensa- 




FIG. 6. GRAPHIC STUDY OF WAGE RATES 



tion OB, no matter how short a time he works. A 
worker, no matter how high his efficiency, if unadapted 
conditions were to run badly against him (see Article 
211) might require a longer time than BD to do the 
job. If he is paid the piece rate OB, the penalty for 
the unadapted conditions falls upon him; but it is the 
duty of the management, not the workers, to adapt con- 
ditions, therefore the latter ought in such a case to be 



EFFICIENCY REWAKD 293 

paid according to the time rate DA. Minimum com- 
pensation would then be represented by the line BDA, 
according to the length of time worked ; and DA should 
represent the market rate of wages for the kind and 
grade of labor concerned. (See Articles 262 and 325.) 

291. However, piece rate with a guaranteed mini- 
mum time rate, represented by BDA, is defective in 
that, at the beginning of betterment, the men are prob- 
ably working somewhere about A, and the effect of the 
application of all the principles of efficiency is to 
shorten the necessary time BD to an extent that to 
them is simply incredible. The piece rate seeming to 
them unattainable, they do not make any attempt to 
reach it; and in order to get them even to try, it is 
necessary to put the piece rate up to a false standard 
OE, which is often very much above OB, and often too 
high for a Fair Deal to the employer, and therefore 
too high for permanent use. This is general experi- 
ence when a form of efficiency reward is installed which 
consists of only piece rate with a guaranteed time rate. 
An example of the working of this is given in Article 
268. 

The possibility of installing a temporary standard, 
to be increased in severity later, has been noted in 
Article 200. Evidently this method could not usually 
be applied in more than a few special cases. Perhaps a 
management which had the confidence of the workers 
by long practice of the Fair Deal might apply this 
method generally and without trouble, but such a case 
can hardly be considered as more than theoretical. 

Supposing that the workers require some substantial 
encouragement at the point F to get them along ; with- 
out committing ourselves to the piece rate EF, we can 
give that encouragement by filleting the corner BDF; 



294 APPLYING EFFICIENCY PEINCIPLES 

that is, by paying a premium on time rate such that 
total compensation will be represented by the curve 
BGF. 

Money payments above the time rate are commonly 
called "bonus/' and are given that name below in 
these articles. 

BGF will be recognized at once as Harrington Emer- 
son 's bonus curve, which it will be exactly, if EF equals 
1.5 times BD, DG equals .2 times OB, FG is a parabolic 
arc, and BG is a straight line. It is not necessary, 
however, to adhere strictly to these characteristics, as 
they may be designed to suit the exact case in hand. 

292. Other forms of efficiency reward for direct 
workers are, of course, in common use. All of these 
forms have been so fully discussed in print that it is 
unnecessary to describe them here. Any one desiring 
further information about them can find very good 
discussions in Kimball's Principles of Industrial Or- 
ganization, and in a pamphlet of the Emerson Com- 
pany, entitled '^ Comparative Study of Wage and 
Bonus Systems." 

293. Even more encouragement than that afforded 
by the bonus curve FG may be necessary, when the 
direct workers are first beginning to increase their 
efficiency. Probably the best way to give this is by 
figuring the efficiency and bonus for every job, or 
every day's work separately, and paying bonus when 
it is earned as thus figured, regardless of the average 
efficiency. 

When bonus is first installed, the workers will at 
least occasionally earn bonus on some job, or for some 
day's work, though they may not be able to maintain 
an average efficiency which would entitle them to bonus. 
The payment of bonus on the occasions when they do 



EFFICIENCY KEWAED 295 

well encourages them and leads them to try to earn 
it continuously. 

This arrangement is obviously not fair to the em- 
ployer; but it is good business for him to tolerate it, 
provided it is only temporary and leads to a continuous 
good efficiency. 

There is a temptation to the workers under this ar- 
rangement to turn in their service cards or otherwise 
report their time before jobs are really completed, thus 
getting credit for completing the job in less than real 
time, and thereby making an apparently high, but false, 
efficiency. It is not to be expected that all will be able 
to resist this temptation. 

Of course the time thus taken from one job adds to 
the next and lowers the worker's efficiency thereon; 
but when bonus is paid by the job, this sort of fraud 
may enable a man to earn bonus on perhaps half his 
jobs, while on a continuous average he could not earn 
bonus on any. 

294. Obviously the only fair arrangement is to aver- 
age the efficiency over a considerable time, usually one 
pay-roll period, as a basis for the payment of bonus. 

The Emerson Company's "Comparative Study of 
Wage and Bonus Systems ' ' says : 

It is much easier to calculate efficiencies and rewards for 
all the operations of the period than for each one separately, 
and clerical expense and effort should be avoided as much as 
possible. 

Finally, a much better conception of a man's ability is 
obtained from a record of weekly or monthly averages than 
from a list of several hundred individual job efficiency records 
fluctuating from 30 to 100 per cent. 

295. I have known workers to object to changing 
from calculation by the separate job or day to calcula- 



296 APPLYING EPFICIElsrCY PEINCIPLES 

tion by tlie pay-roll period. The gang with which I 
had the experience told in Article 211, objected so 
strongly to having their efficiency calculated by the 
pay-roll period, that I never averaged their efficiency 
for a longer period than one day ; but, after the instal- 
lation of the counter, I made a practice of calculating 
their bonus for an occasional pay-roll period on the 
basis of average efficiency for the period and compar- 
ing it with what they were actually paid ; and I never 
found the two to differ by more than a few cents. 

If then conditions can be pretty thoroughly adapted, 
the employer runs no great risk in starting payment 
of bonus by the job or day, since the workers will prob- 
ably settle down soon to a nearly constant efficiency 
and bonus; but if there are conditions which bid fair 
to be permanently unadaptable, the efficiency and 
bonus earnings on the separate jobs will be corre- 
spondingly irregular, as explained in Article 211. Un- 
der such conditions figuring efficiency by the job may 
mean that the employer pays the workers bonus when 
the luck runs in their favor, and obtains no general in- 
crease of efficiency as his own reward. 

296. In such a case it would probably be advisable 
to pay bonus from the start only on average efficiency 
for a pay-roll period; and if the workers do not re- 
spond to an ordinary bonus BGF of Figure 6, to de- 
sign a special bonus curve like BMA. This will, of 
course, commit one to the higher bonus permanently, 
but that is probably better than the alternative. 

297. Minor difficulties may arise in keeping records 
of the actual and standard time, on which the efficiency 
(see Article 325), and then the bonus, is calculated. 

I had a case of this kind in a department in which 
the usual job order would give a man two or three 



EFFICIENCY KEWAKD 297 

days ' work. If a man were given an order of this kind 
on Friday, he would be charged on that pay-roll period 
with all the actual time shown on his service cards 
until the close of the period on Saturday afternoon. 
To determine exactly how much every man had done 
up to the close of work Saturday, would have amounted 
to taking an inventory of the department every Satur- 
day afternoon; and it was held that there was not 
enough to gain to warrant the expense of doing this. 
The man therefore did not receive credit for the stand- 
ard time of the job, until he reported it complete with 
his last service card of the job, on Monday or Tues- 
day, He would thus be undercredited with standard 
time for the earlier period and over credited on the 
later one. 

Evidently these errors would counterbalance each 
other in the long run, so a common way of dealing with 
them is to average efficiencies over several pay-roll 
periods, and to pay bonus on this average. In this case 
a four-weeks period was tried. That is, at the end 
of every pay-roll period, every worker's efficiency was 
averaged for the four weeks last past, and his bonus 
was figured on that average and not on the efficiency 
shown for the last pay-roll period alone. In this case 
a pay-roli period was one week. 

This worked very satisfactorily in smoothing out 
irregularities due to jobs overlapping from one period 
to the next; but it soon appeared that no workman 
had any idea of his efficiency except for the recent past, 
and that if his bonus did not correspond, the moral 
effect of the efficiency reward was lost. I therefore 
had to shorten the period over which the efficiency 
was averaged, and finally came to two weeks as an 
effective working compromise. 



298 APPLYING EFFICIEI^rCY PRINCIPLES 

Where any other unadapted condition brings an ele- 
ment of chance into the worker's efficiency, the case is 
similar to that stated above. 

298. Another minor difficulty in keeping records of 
actual and standard time arises from rejections of 
work on inspection. On this point Knoeppel says : 

We must arrange to charge him (the workman) back with 
rejection for which he is to blame. The workman reports a 
definite production, which is figured at so much standard 
time per piece, on the assumption that the work will prove 
satisfactory and pass inspection. This does away with wait- 
ing for inspection before calculating the efficiencies, which 
in many cases would cause considerable time to elapse before 
jobs could be figured. 

As work is rejected a shop rejection card is made out, fully 
outlining whether or not the man is to be charged back with 
the work. Two plans are possible: 

(A) Deduct the amount of standard time credited to the 
man, leaving the actual time showing in the actual column. 

(B) Deduct both actual and standard time for the rejec- 
tion. 

Plan B is not so severe on the men and can, in most cases, 
be used. "When workmen continue to be careless, however, 
and are unwilling to co-operate in efforts to turn out good 
work, the company is then justified in resorting to plan A. 

Usually pay rolls for any period are not figured 
until the end of the next, so that the workers are al- 
ways paid for one period back. It is convenient to 
handle bonus in the same way. It ought then to be pos- 
sible to get the rejection reports in soon enough so 
that the efficiencies for the pay-roll periods in which 
the work was spoiled can be corrected for rejections 
before bonus is paid. 

This certainly ought to be done, because otherwise 
an objectionable element of chance is brought into the 
worker's efficiency. He may do a quick and careless 
job and have a large amount of rejection, which, how- 



EFFICIENCY KEWAKD 299 

ever, may not be figured against him during that pay- 
roll period, so that his low actual time may give him 
a fictitious high efficiency and a big bonus. During the 
next period an earned good efficiency may be spoiled 
by the charge against him for rejections from the 
previous period. 

299. The matter of interruptions has been noted in 
Article 104. Time lost by interruptions, except those 
short ones of minor importance that are allowed for 
in the standard time, is covered by the exception cards 
and simply does not count, either as actual or stand- 
ard time. 

300. Referring to Figure 6, page 292, we occasionally 
find already in force an excessively high piece rate. 

Suppose the case to be that the men are earning 
37.5 per cent more on the piece rates than the local 
market time rate ODA of Figure 6; they would then 
be working at about the point N. If, now, all piece 
rates were abolished and the men were put on the 
guaranteed minimum time rate ODA and bonus as 
shown either by BMA or BGF, they would immediately 
translate this action into a cut in piece rates. This 
might be required by a Fair Deal to the employer ; but 
the men would not be likely to realize this ; and trouble 
might follow. 

Now, suppose that we put in instead a guaranteed 
time rate OQN. The men have now no cause for com- 
plaint because, in the same time, EN, they will make 
the same total earnings, OE, as before. All experience 
shows that if the time rate is thus raised 37.5 per 
cent, men can be secured for it who are at least 50 
per cent better than the average of the local labor 
market. The next step is therefore for the employ- 
ment supervisor and the shop executives to get to work 



300 APPLYING EFFICIENCY PEINCIPLES 

on a careful selection of men in order to secure such 
as are really worth the wages paid. With the under- 
standing that the shop is to be manned with help of 
this kind, the standard time, instead of being made 
BD, can be made PQ, not over two-thirds as long. The 
corner PQT can then be jfilleted by some suitable bonus 
curve PST. In wage cost this will be more expensive 
to start than will the lower day rate and bonus curve 
as shown in Figure 6, by the amount that NTR stands 
above FWR; but when the avoiding of possible labor 
troubles is considered, it will probably not be so ex- 
pensive in total cost. The final result to the employer 
is that, instead of having a total wage cost of the job 
averaging UG, he will attain the lower average VS. 

This is also perfectly fair to the men because they 
had got as far as they could by their unaided efforts in 
working at the point N. Those improvements which 
have reduced the time of the job from EN to PQ, are 
due to the management and not to the men. Neverthe- 
less the men have been given a share of the benefits 
such that, in working at the point S, they are receiv- 
ing the equivalent of the time rate OS, which is con- 
siderably higher than ON, the equivalent at N of their 
former piece rate. Also the matter has been put up 
to them from the beginning in such a way that they 
had everything to gain and nothing to lose. 

An exception may occur in the case of those men who, 
on the old piece rate EF, were already earning more 
than the equivalent of the time rate ON. There are 
not likely to be many such men, and they are the very 
ones whose labor is the best investment to the em- 
ployer and who should by all means be retained. Their 
cases can probably be best attended to by working out 
for them individual time rates and bonus curves, which 



EFFICIENCY BEWAED 301 

shall give a Fair Deal both to them and to the em- 
ployer. 

301. Selection of men becomes unusually important 
in the case of an original excessively high piece rate, 
but it is in every case an important feature of better- 
ment work. It may be asked why the employer should 
ever retain a worker of less than 100 per cent efficiency. 
The answer is that, with the existing supply of labor, 
a man of even 80 per cent efficiency is too good to be 
lightly parted with. However, it is up to the employer 
to get the best men that he can and if he can fill his 
shop with 200 per cent men he is foolish not to do it. 
But see also Article 308. 

302. Attention is called in Article 331 to the impor- 
tance of the efficiency of materials. It will be well 
to read in this connection Articles 221 and 222 also. 

I have encountered jobs in which the ratio of cost 
of direct materials to cost of direct labor was as high 
as nine to one. In this case the workers were being 
paid piece rates — that is, they were being stimulated 
to save on 10 per cent at the expense of wasting on 90 
per cent. It is obvious that in any case where mate- 
rials constitute a considerable part of the cost of a job, 
the worker should not be encouraged to save on labor 
only, since this inevitably produces a tendency to waste 
materials. 

The consideration which has appealed to me in this 
connection is that a dollar is a dollar, whether it is 
spent for materials or for labor; or, in other words, 
that what the employer wants is to reduce the money 
cost of a job, rather than to save either material or 
labor as such. 

I have therefore tackled the job by determining pri- 
marily how much waste of materials should be al- 



302 APPLYIN^G EFFICIENCY PEINCIPLES 

lowed. For reasons which will appear, this should be 
large enough to allow the worker a margin on which 
to earn bonus ; but it may be considerably better than 
current practice. For example, in one case, two stud- 
ies which were made independently by different observ- 
ers using different methods and on different jobs, 
showed 31 per cent as the amount of original material 
that went into scrap. After careful study of the data, 
I set 14.5 per cent as the standard amount of waste, 
for reduction below which bonus would be paid. On 
this standard the workers earned a handsome amount 
on the very first bonus job. 

In material bonus work, in my experience, the ratio 
of cost of direct materials to cost of direct labor has 
not been less than six to four. Hence I have desired 
in these cases to encourage the workers to work 
carefully and save materials, rather than to work fast 
and save time. I have therefore set the standards of 
time as nearly as possible at what the workers were 
already doing. As will appear, the form of bonus was 
such that the worker would earn no bonus on time if he 
worked just as fast as his previous habit, and would 
lose on his total bonus if, in the effort to save material 
under the incentive, he slowed down from his previous 
habit. 

Net materials required for the job are of course 
known from the dimensions of the output. These, with 
standard waste, give standard original materials for 
the job. These multiplied by unit cost of the material, 
give standard cost of the material. Standard time 
multiplied by standard time-rate, gives standard cost 
of direct labor. Standard labor-and-material cost of 
the job is thus obtained. 

In some cases valuable by-products may be produced. 



EFFICIENCY EEWARD 303 

The material service card should then record amount 
and value of this by-product. The standard value of 
the by-product then subtracts from standard labor-and- 
material cost of job as figured just above. 

The jobs then go to the workers with a standard 
total labor-and-material cost. Records are kept of the 
costs actually achieved. See Article 114. The value 
of the by-product actually produced subtracts from the 
total actual labor-and-material cost. 

Standard total cost minus actual total cost gives the 
gross saving, and the workers on the job are paid a 
percentage of this as their bonus. In my experience 
bonus has had to be between 20 per cent and 33.3 per 
cent of the gross saving, in order to secure the co- 
operation of the workers. 

This form of bonus has the advantage of being sim- 
ple and easily calculated, of being so flexible that it is 
adapted to all sorts of conditions and jobs, and to 
men who work fast and save time, just as much as to 
those who work slowly and save materials. 

Before installing this form of bonus, I have ex- 
plained it to the workers, and have taken care to point 
out to them that they were most likely to earn bonus, 
not by hurrying, but by working carefully and saving 
materials, and by taking as much time as they needed 
for that purpose. 

The immediate result has been a reduction of waste 
of materials, with time remaining substantially the 
same as before; but later some slight reductions of 
working time have also been made. 

303. It is sometimes desirable to bonus a worker 
wholly or in part on the work of others than himself. 
Bonus to instructors (Article 235) and to foremen 
(Article 288) based on the efficiency of those under 



304 APPLYING EFFICIENCY PEINCIPLES 

them, hardly comes in this class, since it is properly 
the work of the foremen and instructors to maintain 
this efficiency. Sometimes the efficiency of a worker is 
very dependent upon the condition in which work 
comes to him from a preceding operation. It is then 
proper to bonus those who perform the earlier opera- 
tion, in whole or in part, on the efficiency attained on 
the later one. 

Gantt gives an illustration of this as follows: 

Inspecting cloth and mending slight defects in weaving, 
trimming ends, etc., ... is high grade work and all defects 
must be eliminated. We started the task after careful study, 
. . . These inspectors were supplied with work and had the 
heavy cloth handled for them by three men. . . . Each of 
these men received two cents for each girl (inspector) that 
made a bonus. Early in July it was decided to give the boss 
weaver ... a bonus. He is an excellent man and was un- 
doubtedly doing his work well, but we felt that his bonus 
should depend upon the quality of the work turned out. 
Inasmuch as the better the cloth was when it came from the 
weaving room, the easier the task of the inspectors would 
be, we decided to make his bonus in proportion to the number 
of inspectors that earned theirs. The inspectors at once be- 
gan to earn bonus with great regularity, for the boss weaver 
found that the inspectors were only too anxious to point 
out defects which it was to his interest to have corrected. 
He visits the inspecting room frequently during each day, and 
by the reports he gets keeps closely in touch with what his 
weavers are doing. The result is a continuous improvement 
in the quality of their work. 

304. Beside efficiency in work, moral qualities are 
worthy of reward. Suppose, for example, that a va- 
cancy exists in an assistant foremanship. Naturally 
an efficient workman would be selected, but we should 
want one who had also been regular in attendance, who 
was truthful and honest, who had been amenable to 
Discipline, and who had minor executive ability. 



EFFICIENCY EEWAED 305 

Other qualities might be wanted also according to the 
nature of the case. Those records of workers which 
have been mentioned in Articles 43, 47, and 138 then 
enable a selection to be made on the basis of exact 
knowledge. When this method is followed, promotion 
automatically becomes an efficiency reward for those 
moral qualities which are not directly rewarded by 
bonus on a percentage of efficiency. 

305. The old man who has shown fidelity over long 
years of service is entitled to an efficiency reward, it 
may be even to the extent of making him entirely a 
pensioner. One is reluctant to put anything like this 
on a business basis ; but it might as well be recognized 
that it pays. Every superannuated employee in an 
easy job is a living object lesson to the younger men, 
that they too, if they stick by the firm, will be taken 
care of ; and is one of the best of inducements to them 
to be patient even when things do not seem to be ex- 
actly right, and to stick by their jobs and give the 
firm a chance to work out its schemes, even if they do 
not fully understand them. 

306. Opposition to efficiency work does not usually 
come from the direct workers ; nevertheless, the means 
of avoiding it should be understood. It is therefore 
desirable to enquire into the causes that may lead 
them to oppose. 

Kimball gives the following causes for opposition by 
the workers: 

First, because the great majority of men are naturally 
afraid of all new things that they do not understand and 
the effects of which they cannot clearly foresee. It is very 
evident to the workers that time and motion study puts into 
the hands of the employer a much more powerful selective 
agency than he has hitherto possessed, and the worker is justly 
afraid of these scientific methods in the hands of the unscien- 



306 APPLYING EFFICIENCY PRINCIPLES 

tifie, the unscrupulous, and the ignorant employer. If this 
selective power is used solely for the purpose of sorting men 
so as to eliminate the indolent and those who are clearly un- 
fitted for the work in hand, there can be no objections raised 
against it from the humane standpoint. If, however, it is 
used to eliminate all but the very best workers, the effect will 
be disastrous both from the humane and from the economic 
standpoint, until an entire readjustment of the field has 
taken place. What is needed is a scheme whereby every 
man can be worked up to his full efficiency, whether or not 
his output be as great as that of his neighbor. 

Secondly, the worker may object to these new methods 
because of his inherent inertia. The workman who has once 
learned and long practiced certain methods of doing work is 
seldom willing to admit that better ways may be devised if 
these ways appear to be radically different from those to 
which he is accustomed. 

And lastly, he naturally opposes these new methods because 
his own experience and his inherited point of view naturally 
lead him to suspect any new methods that promise increased 
remuneration for increased efforts. 

The first two objections may, perhaps, be removed by edu- 
cational methods, but the third is deep rooted and involves 
principles that even the advocates of the new methods have 
not always fully appreciated. The basis of this objection is 
distrust and the root of distrust is most usually selfishness, 
sometimes on the part of the employee, but more often on the 
part of the employer; and this can be removed only when 
employer and employee can agree as to what is a just and 
equitable division of the profits of industry ; and this involves, 
not the application of scientific methods to human relations, 
but the application of the Fair Deal on the part of all con- 
cerned. 

307. As to the application of Kimball's suggestion 
of educational methods for the removal of his first 
two objections, Knoeppel suggests the following con- 
crete measures : 

In the first place some notification should be made to the 
men describing the plan as follows: 

(1) Getting all the men together and addressing them. 

(2) Calling a meeting of the best element in the shop and 



EFFICIENCY EEWABD 307 

carefully explaining the plan, furnishing them with data so 
that they in turn can explain it to their fellow workers. 

(3) Inserting in the pay envelopes of the men a little 
booklet describing the proposed methods. How to figure the 
bonus, the matter of allowances, and other essential points 
can be condensed to make a four-page booklet, which will 
assist materially in getting the men to understand the 
methods. 

The men should be made to feel that they will have a voice 
in the matter — that no one will be forced to attain 100 per 
cent efficiency. The fact that bonus will be paid for all 
saved time should be pointed out. 

They should further be told that day wages will be paid 
whether men earn bonus or not. It will also be well to advise 
them regarding the steps that have been taken by the man- 
agement in improving planning, in standardization of the 
conditions and operations, all of which will enable the men 
to get some idea of the expense of introduction, which will 
assist in enlisting their support. 

If men refuse bonus, as some of them might, place it in the 
bank to their credit. They will take it later. If they don't, 
their wives will. 

Two points in connection with Knoeppel's scheme of 
a preliminary educational campaign are important 
enough for special mention. 

The first of these is to make it clear to the work- 
ers not only that they will benefit by the proposed 
methods, but that the employer will also. As long as 
they do not see how he is to profit, they look upon the 
scheme as some sort of a trap in which they are to be 
caught by misrepresentation, to their ultimate damage 
and the benefit of the employer. When it is made clear 
to them that both sides profit together, and that the 
benefits to each are dependent upon those to the other, 
they begin to accept the employer's statements and to 
feel a common interest with him in the matter. 

The second point is to make clear that, in working at 
higher efficiencies, they will not be killing their jobs. 



308 APPLYING EFFICIENCY PEINCIPLES 

It is one of the most obvious things on earth to the 
direct workers that, if they do their work in less time, 
fewer of them will be needed to do it ; and on this ac- 
count many of them will fear that the effect, as far as 
they personally are concerned, will be to deprive them 
of their jobs. It is necessary to make it clear to them 
that higher efficiency means lower costs ; that, if costs 
are lowered, the goods can be sold cheaper ; and that, 
at the lower prices, enough more goods can be sold to 
keep them all in work. 

308. It is obvious that it would be of vast economic 
value, if every one could be assigned to the work for 
which he is most fit. It is equally obvious that if em- 
ployers generally should suddenly exercise their selec- 
tive power in a negative way only, that is, to separate 
the unfit from their jobs, very great and widespread 
suffering would ensue and that, in view of the inability 
of the workers (see Article 267) by their own efforts 
to secure the tasks for which they are fit, this disas- 
trous upheaval would bring us very little nearer to the 
solution than we were before. 

Of course, as the work is done in one plant after 
another, there is time enough for adjustment to take 
place without general suffering ; nevertheless, if the in- 
dividual employer practices in his own plant nothing 
but the elimination of the unfit, he will cause local suf- 
fering and will greatly increase the opposition of his 
own employees and of workers generally to all efforts 
to increase efficiency. 

Fortunately there are very few people who are not 
fairly well fitted to do something; and usually if a 
worker proves inefficient at one job, another to which 
he is better adapted can be found for him in the same 
plant. As noted in Articles 47 and 48, one of the 



EFFICIENCY REWARD 309 

features of betterment is that tlie employment super- 
visor and the executives shall co-operate to place every 
worker as soon as possible in a position for which he 
is naturally suited. 

It is only by such action by individual employers 
that Kimball's scheme, *' whereby every man can be 
worked up to his full efficiency whether or not his out- 
put be as great as that of his neighbor," can be 
brought within the range of present reality; but by 
such action it can be realized in every plant to the 
limit of the local opportunities. 

309. A preliminary educational campaign, as sug- 
gested by Kimball and Knoeppel, amounts to an ap- 
peal to reason. Unhappily, where passions have been 
aroused, the reason is not accessible to any appeal. 
Here that ''distrust" noted by Kimball is so strong 
that no appeal is accepted as made in good faith. In 
that case a prerequisite to success is the persistent 
practice of the Fair Deal, until passions have died 
down enough so that a basis of common understand- 
ing can be reached. 

On this point Gantt says: 

If the men know that the employer will stand by his word, 
and not change the time for performing a task when it has 
been once set, they get confidence in him, and the problem of 
increasing the efficiency of the plant becomes easy. 

In attempting to increase the efficiency of a plant, then, 
the first problem is to convince the workman of our good 
faith and that they will be treated fairly. When this has 
been done, we always have their co-operation to a degree en- 
tirely unsuspected by those who have never tried that method. 

An example of the practical application of these 
principles is given in Article 8. 

310. The time to put the direct workers, or any of 
them, on standard time and bonus is one of the most 



310 APPLYING EFFICIENCY PRINCIPLES 

critical points of betterment work, and must be care- 
fully watched; and in every case must be decided ac- 
cording to the local circumstances. 

Articles 99 to 104 will show that Planning and Des- 
patching and Eecords must be developed about to the 
point described by those articles before the mechanism 
for the determination of efficiency and the payment of 
bonus is in existence. 

Bonus payments on efficiency based on standard time 
should begin at such a time afterward that the workers who 
are offered the bonus can begin to earn small sums almost 
immediately, and before long can begin to earn substantial 
additions to their time rates. 

Occasionally the principal inefficiency is idling by 
the direct workers ; in that case they can earn bonus 
on proper standards from the outset, and it may 
be offered as soon as Planning and Despatching and 
Eecords are sufficiently developed to take care of 
it. 

Where there are other substantial obstacles to effi- 
ciency, the workers may be unable to earn bonus on 
proper standards until these obstacles have been re- 
moved, and bonus should therefore not be offered to 
them before these betterments have been effected. 

Occasional exceptional conditions may justify the 
use of a few temporary standards, as noted in Arti- 
cle 200. 

It is difficult to keep up the workers' interest through 
a long struggle toward higher efficiency, during which 
they do not earn any bonus. Even the payment of 
small amounts of bonus is not long effective. When 
a man finds a few cents of bonus in his pay envelope, 



EFFICIENCY REWARD 311 

the event is apt to be the occasion for general derision. 
The incentive, which is mostly hope thus far, will not 
long be effective against that, unless the amount of 
bonus steadily increases until it reaches a respecta- 
ble amount. 

On the other hand, as Planning and Despatching are 
developed, Conditions are Adapted, and the men are 
Instructed in Correct Methods ; in fact as general prog- 
ress is made in the application of all the Principles of 
Efficiency, all these things make possible the perform- 
ance of the work in less time ; and unless the men are 
offered an efficiency reward for co-operating and mak- 
ing good use of the opportunities thus offered them, 
they may simply absorb these opportunities in loiter- 
ing. If they continue in this way, loitering becomes a 
fixed habit, and is correspondingly difficult to eradi- 
cate. Therefore the starting of bonus must not be un- 
duly delayed. 

Evidently in deciding the proper time at which to 
start bonus, the efficiency engineer has to hit a pretty 
small target. Fortunately one can miss the exact 
bull's eye without causing absolute failure. Mistakes 
can be corrected by care and patience ; but the nearer 
one can come to the exact psychic moment in starting 
bonus, the better things will go. 

311. It has been stated in Article 102, that the des- 
patcher should enter the standard time for the job on 
the service card, before the card goes to the worker. 
For convenience in figuring the efficiency, this entry 
should be made in decimals of hours. 

As a statement of work to be done however, a stand- 
ard expressed as so many pieces per hour is much 
easier to understand. In this connection, Knoeppel 
makes the following recommendation: 



KJUIICLIUIC 

BONUS IN CENTS 







1 per 
5 *' 


dollar wage 


10 " 


H (I 


25 " 


(I << 


35 " 


<< (( 



312 APPLYING EFFICIENCY PEINCIPLES 

It is an excellent plan to give the workmen, in addition to 
any instructions that may be prescribed, an outline of pro- 
ductions required at varying efficiencies. A standard ex- 
pressed in terms of pieces per hour sometimes scares a work- 
man. He feels it to be an impossible task and as a result 
is discouraged even before he tries. The facts can be pre- 
sented as follows: 

Operation Part No Schedule 

PIECES PER HOUR EFFICIENCY PER CENT 

45 60 

50 67 

60 80 

68 90 

75 100 

83 110 

As can be seen, the operator first sees the 45 pieces per hour. 
He knows he can do this. He sees the 50 and 60 and feels 
that by a little extra effort he can turn out the required 
amount. He feels that 68 would be hard, 75 difficult, with 83 
out of the question, but he knows that he can do enough to 
qualify as a bonus earner to begin with, and this is an impor- 
tant consideration with many workmen. As he becomes more 
familiar with the plan and the work, he is not so afraid of the 
standards as he was to begin with. 

Such a tabulated statement as Knoeppel suggests is 
conveniently issued to the worker with the service 
card. This should be regarded as a temporary meas- 
ure only. As soon as the worker has found that he 
can average a good efficiency and earn bonus regularly, 
the special statement of the standard can be discon- 
tinued. 

312. For reasons which are indicated in Articles 
198, 208 and 209, the standard times, as originally in- 
stalled, will tend to be too short. Immediately after 
workers are started on standard time and bonus, their 
efficiencies should be watched. If they do not earn 



EFFICIENCY REWARD 313 

bonus soon and if their efBciencies do not improve con- 
tinuously until they regularly average about 100 per 
cent, the causes of this failure should be investigated ; 
and if it is found that the standard time is too short, 
it should be corrected promptly. The workers should 
also be encouraged to complain of any standards that 
they consider unreasonable. They will probably hesi- 
tate about doing this at first ; but if they see that the 
efficiency staff, independently of them, is trying to find 
and correct standards that are too severe, they will be 
encouraged to express their own opinions. A standard 
should not be made easier on a worker's complaint 
without a restudy. If the standard is found to be too 
severe, the relief should be prompt. If it is decided 
to keep the standard in force, the reasons for doing 
so should be explained. For example, it may be found 
that some unadapted condition has escaped observa- 
tion; and that by the correction of this the standard 
time will be made reasonable. If so, the fact should 
be explained to the worker and the condition should 
be adapted as promptly as possible. 

Naturally the workers' fear is that standard times 
will be shortened. If instead they see that none are 
shortened but that those that are too severe are length- 
ened, the effect is excellent and goes far toward win- 
ning the necessary confidence of the workers. 

313. In order that the full moral effect of bonus 
may be produced, it is necessary that the workers 
should think of it as a separate and distinct thing from 
wages. To this end, it is common practice to pay the 
bonus on a different day from wages, or to accom- 
pany the payment of bonus with a separate little 
voucher check or memorandum, stating the amount of 
bonus and perhaps also the efficiency. 



314 APPLYING EFFICIENCY PBINCIPLES 

314. Bonus to the direct workers is instituted pri- 
marily to stimulate individual efficiency. It not only 
does this but also promotes team work. The reason 
for this paradoxical result is that, under the division 
of labor existing in industry, every worker is depend- 
ent upon others so that, if one man fails to work effi- 
ciently, he hinders others as well. The pressure upon 
every man from his shopmates to keep up his end 
therefore becomes so great that inefficient men have 
not the moral stamina to resist, and either become effi- 
cient or get out. 

315. While efficiency reward is essential to full re- 
sults, we should remember the limitations of this prin- 
ciple, which, in the minds of many business men and 
managers, seems to have usurped the whole field of 
efficient management, as they evidently think that by 
paying bonus or by working on piece rates, they have 
solved the whole problem of efficiency. 

On the contrary all that efficiency reward can do is 
to encourage a man to take an intelligent interest in his 
task, to work faithfully at it, and to give the employer 
his good will. These are very important, but are not 
the only problems of management. For instance, noth- 
ing that the individual can do can fully make up for 
the lack of adequate planning and despatching. 1 
have seen workers on piece rates chafing in idleness 
and without pay because the management could not, 
or did not, get work to them which was in the plant 
and for which they were eager. Only, the application 
by the management of all the principles of efficiency 
can produce a perfect result. 



Chapter XV 
DETERMINATION OF EFFICIENCIES 

316. 

ONE must know not only where the inefficiencies 
are and how to correct them, but where to begin 
and how to direct the work, so as to get financial re- 
sults at the greatest possible speed. 

Compared to European practice, the efficiency of the 
American factory power plant is usually very low. 
On the other hand, the cost of power to an American 
factory is usually so small a part of the total operat- 
ing cost, that no great percentage of saving would be 
shown, even if free power were obtained. In other 
parts of a plant low efficiencies may also be found, 
whose improvement would not be of appreciable finan- 
cial value. 

317. Usually it is a condition of successful better- 
ment that financial savings should be shown without 
long delay and without great cost to secure them ; at 
least that the work should soon begin to pay for it- 
self. Hence it is usually necessary to undertake at 
first some line of work which will begin very soon to 
show an appreciable saving in money. 

318. Supposing the total cost of operating a depart- 
ment for one year to be $100 000, and its efficiency to 
be 70 per cent, then the cost is divisible as follows : 

315 



316 APPLYING EFFICIENCY PRINCIPLES 

Standard cost $70 000.00 

Inefficiency 30 000.00 

Total cost $100 000.00 

The inefficiency of $30 000 is a preventable loss and 
by raising the efficiency to 100 per cent, the cost can 
be brought down to $70 000. 

Hence there are two factors in the determination 
of feasible saving — actual cost, and efficiency. 

319. Work in any one department, or even on any 
one operation, is never limited in its effects to the di- 
rect point of application, but produces results which 
spread through the whole business. Conversely, the 
efficiency of the department in which work is under- 
taken is affected by the efficiency of other departments, 
especially of those which come before it in the manu- 
facturing process. 

320. For the reasons above stated, it is necessary to 
approximate actual costs and efficiencies throughout 
the business, before deciding on the point at which to 
begin work. 

321. This chapter deals with the determination of 
efficiency; that of the other factor, actual cost, is con- 
sidered in Chapter XVI on Cost Finding. 

322. Any element of cost is the sum of three terms : 
Cost of direct labor, or labor applied directly to 

the element in question ; 

Cost of direct materials, or materials applied di- 
rectly to the element in question; and 

Its proper share of the burden or overhead ex- 
pense, due to the business in general, but not trace- 
able directly to any item of product. 

323. Hence we have also three efficiencies to deter- 
mine: 



DETERMINATION OF EFFICIENCIES 317 

Efficiency of direct labor; 
Efficiency of direct materials ; and 
Efficiency of overhead expense 

324. Any one of these three efficiencies is the prod- 
uct of four factors : 

Efficiency of use; 
Efficiency of supply; 
Efficiency of price ; and 
Efficiency of distribution. 

325. These four factors of efficiency are defined as 
follows : 

Efficienct/ of Use is the quotient obtained by dividing 
actual result obtained by the use of anything, by what 
ought to have been obtained — that is, by the standard 
result. If a workman in one hour produces seventy 
pieces when the standard result is one hundred, the 
efficiency of use of his labor is seventy per cent. It 
is more convenient usually to express this efficiency 
for labor in terms of standard and of actual time. In 
the example given, the standard time for producing 
one hundred pieces would be one hour, while the actual 
time required would be 1.43 hours. The efficiency 
would then be standard time divided by actual time, or 
1. ~ 1.43:=70 per cent. 

Efficiency of Supply is the quotient obtained by di- 
viding the amount of anything which would be neces- 
sary for any purpose (that is the standard amount) 
by the amount actually so provided. If one hundred 
men are employed, where only ninety-five are needed, 
the efficiency of supply of labor is 95-^-100=95 per 
cent. 

Efficiency of Price is the quotient obtained by di- 
viding what ought to be paid for anything (that is the 
standard price) by what is actually paid for it. If the 



318 APPLYING EFFICIENCY PRINCIPLES 

average rate of wages in a plant is 19 cents per hour, 
when the local market rate for that class of labor is 
22 cents per hour, the efficiency of price of labor is 
22-f-19=116 per cent. An efficiency of price of labor 
above 100 per cent is often found, and is invariably 
a cause of inefficiency of labor because it results in 
filling the plant with the culls of the local labor market, 
thereby running down both efficiency of use and effi- 
ciency of supply to such an extent that the product of 
the four factors is, on the whole, decreased. 

Efficiency of Distribution is the quotient obtained by 
dividing the price of what ought to be used to pro- 
duce a given result (that is the standard price) by 
the price of what is actually used. If a mechanic re- 
ceiving 35 cents an hour is used to do work that ought 
to be done by a machine operator at 22 cents per hour, 
the efficiency of distribution of labor is 63 per cent. 

326. Suppose that the four factors of efficiency have 
the values given in the above examples. Then the 
efficiency of labor is the product of the four ; that is 

.7X95X1.16X.63==48.5 per cent. 

327. Usually it is most convenient to determine the 
efficiency of use of labor by time studies. It is not 
necessary to make a large number of studies for this 
purpose, provided the subjects of the studies are prop- 
erly selected. My own practice is to ask the foreman 
of every department to select for time study a few 
workers whom he considers to be about the average of 
his department. A time study is then made of each 
of these workers, and standard and actual time is 
determined from every study. Standard time divided 
by actual time gives the efficiency of use of labor in 
every case, and the average of these results gives the 
efficiency of use of labor in the department. Where 



DETERMINATION OF EFFICIENCIES 319 

the subjects of study are selected as above stated, I 
have found the error of sampling, though appreciable, 
to be negligible for the purpose in hand. 

328. The efficiency of supply of labor can be ap- 
proximated closely enough in the course of a few days, 
by wallcing through the plant at various times during 
working hours, counting the number of workers who 
are idle at the moment of passing them, and compar- 
ing this with the number of workers present. In de- 
termining the result, allowance must be made for the 
amount of rest during working hours, which is neces- 
sary to obtain the maximum of efficiency of labor as 
the final product. See Article 208. 

Suppose that, on an ordinary class of work, out of 
one hundred male workers present, twelve are ob- 
served to be idle at the moment when the observer 
passes. Since 10 per cent should be resting at any 
moment, and thus only ninety men should be at work, 
the efficiency of supply of labor is 88-r-90=98 per cent. 

329. The efficiency of price of labor can be obtained 
by comparing the pay-roll of the plant with the local 
market rates of wages for workers of the same class. 
In so doing the effect of the application of the prin- 
ciple of Efficiency Eeward must be considered, because 
maximum savings will not be effected unless the work- 
ers are given a share of them by the application of 
this principle. For example, let the average hourly 
wage rate of the workers be 20 cents, while the aver- 
age market rate for their class of labor is 22 cents. 
We shall have to count, not only on paying them 22 
cents per hour, but on paying them an efficiency re- 
ward as well. This is more fully discussed in Chapter 
XIV; but may here be assumed with sufficient accu- 
racy at 20 per cent of the hourly rate. Efficiency re- 



320 APPLYING EFFICIEITCY PBINCIPLBS 

ward will then cost 4.4 cents per hour, making the total 
average standard cost of labor per hour, 26.4 cents. 
The existing efficiency of price of labor would then 
be average standard cost divided by average actual 
cost, 26.4^20=132 per cent. 

330. Efficiency of distribution of labor can be deter- 
mined by time-motion studies; an example of such a 
study and of determinations from it is given in Table 
6 and in Article 166. Usually it would take more time 
than is desirable to spend on preliminaries, to make an 
approximate determination of this factor of the effi- 
ciency of labor, and it is therefore usually best at this 
stage to assume that it is 100 per cent. This makes 
the estimate of feasible saving on labor conservative, 
as it is better that all preliminary estimates should 
be. 

331. A time study is an analysis of the use of a sam- 
ple of time, in which the total time is separated into 
certain parts, the percentage of each of these elements 
used or wasted is determined, and causes, if possible, 
are determined for such losses as are detected. It is 
evidently possible to analyze the use of sample lots 
of materials in the same way, and to obtain correspond- 
ing results, from which may be determined the effi- 
ciency of use of materials. There is this difference, 
that while a skilled time-study man can usually (though 
of course not always) estimate approximately the 
efficiency of the use of labor without the aid of any 
one skilled in the particular process which is under 
investigation, such aid is apt to be needed to estimate 
the percentage of material scrap that should have been 
saved. 

This kind of an analytical study of the use of mate- 
rials has not attracted much attention in the literature 



DETERMINATION OF EFFICIENCIES 321 

of efficiency, but it is important. Especially where 
large quantities of valuable raw materials are cut up 
as the first stage of a manufacturing process, there is 
apt to be considerable waste, of which an appreciable 
part can be saved by comparatively simple methods. 
This is discussed in detail in Article 302. 

A paper by E. C. Church before the National Asso- 
ciation of Cotton Manufacturers states the ways in 
which the values of the other three factors of the effi- 
ciency of material are commonly lowered in practice, 
and therefore indicates the points which may require 
attention in a preliminary investigation. 

With headings supplied according to the definitions 
of Article 325, Church's statements are as follows: 

EFFICIENCY OF SUPPLY 

In the first place much unnecessary material is bought. 
While a purchasing agent is haggling over some slight differ- 
ence in price he may be unaware that the supplies he is bar- 
gaining for are quite unnecessary, in fact that there are 
already plenty on hand. This will often happen where im- 
proper storeroom methods and the absence of the necessary 
records fail to reveal the conditions. 

Many requisitions are excessive in amount. The purchaser 
may not realize that carelessness in the estimating department 
has resulted in ordering an excess of material. Buying even 
a little extra material which is not needed and will not be 
used, may offset the most painstaking price shaving ten to one. 

EFFICIENCY OP PRICE 

Market conditions are often ignored. Perhaps when sup- 
plies are bought they are bought as cheaply as possible, yet 
it frequently happens that lack of forethought makes it neces- 
sary to go into the market when conditions are unfavorable 
and prices high — just because no proper attempt had been 
made to estimate the future requirements of the business and 
plan a purchasing campaign to extend over a considerable 
period of time and thus take full advantage of the various 



322 APPLYING ErFICIENCY PEINCIPLES 

fluctuations and changes in trade conditions. What is a low 
price, if forced to purchase at once might really be a high 
price when compared to the figure that might have been 
obtained if the necessity for making the purchase could have 
been foreseen. 

The best purchasing economies are rendered of no avail 
by a careless inspection of the goods actually delivered. An 
infinitesimal difference in price between competitors is in- 
stantly apparent on the bid sheet, but vital differences in 
the value of their respective deliveries might remain undiscov- 
ered unless there be a careful and systematic inspection of 
all goods bought. Superficial examination and a mere count- 
ing and weighing will not suffice. 

EFFICIENCY OP DISTRIBUTION 

Again, too expensive supplies are often ordered. Perhaps 
while all the attention of the agent is being given to this small 
difference of price it may be that the man ordering the sup- 
plies in question specified qualities and grades superior to 
the requirements of the work to be done. Without standard 
specifications based on the actual conditions to be met it is 
easy to buy materials that cost double what is necessary. 

Frequently supplies are not put to the use for which they 
were intended. High grade materials are invariably issued 
by careless men in charge of supplies if the cheaper article 
called for is not in stock or convenient to get at. The differ- 
ence in price between the material actually used and the mate- 
rial that would have served the purpose is a clear loss. 

332. The efficiency of some overhead expense, power 
for example, can be determined approximately by sci- 
entific tests. At the other extreme, the efficiency of 
other overhead, like depreciation, is very elusive by 
any method of determination. However, the salient 
fact about the overhead is that it remains nearly con- 
stant regardless of production, while for any given 
number of workers production will vary directly with 
the product of the efficiency of supply and the efficiency 
of use of labor. Therefore to the extent that feas- 
ible increase of efficiency of supply and use of labor can 



DETERMINATION OF EFFICIENCIES 323 

be utilized to increase production, a reduction of over- 
head per unit of product can be counted on, almost in 
the inverse ratio of the product of these efficiencies. 
If the market will not absorb any increase of produc- 
tion, practically no saving in overhead can be counted 
on. Of course the investigator may in a particular 
case detect the possibility of savings in overhead ex- 
pense, and in the course of the actual work of better- 
ment some such will probably be discovered. It is usu- 
ally necessary to count on an increase in the overhead 
expense due to supervision. Probably some clerks, 
time-study men, and planners will be needed to operate 
permanently the efficiency measures which are expected 
to be installed ; and the annual pay roll for these should 
be estimated as an additional expense of supervision. 
Very often, also, foremen ought to be relieved of cleri- 
cal work, and adequate inspection force ought to be 
provided, all of which means additional expense of 
supervision. 



Chapteb XVI 
COST FINDING 

333. 

IT was pointed out in Chapter XV that, in order to 
begin work where appreciable money savings would 
result as quickly as possible, it is necessary to know 
not only efficiencies but also actual costs. It is there- 
fore advantageous to determine costs as a part of the 
preliminary work. 

334. Cost finding moreover is important not only as 
a preliminary, but continuously throughout all man- 
agement. It is therefore necessary to treat it more 
broadly than would be necessary for the mere purpose 
of a preliminary determination of where and how the 
money is being spent. 

335. Let us apply to our own work the principles of 
efficiency and inquire what are the Ideals in cost find- 
ing. Evidently they are as follows : — 

For the factory executive : — 

To make known approximate costs immediately, 
rather than exact costs after long delay. 
For the accountant : — 

To enable the daily collection from the factory of 
a sufficient amount of burden on regularly recurring 
direct expenses, to balance as nearly as possible the 
overhead expenses which occur more or less irregu- 
larly. 

324 



COST FINDING 325 

For the sales manager : — 

To make known the approximate cost of the fin- 
ished article in order that selling may be directed 
intelligently. 
For the purchasing agent : — 

To make known the approximate effect on the cost 
of the finished article, of variations in the cost of 
supplies and of periods of storage, in order that ad- 
vantage may be taken of the condition of the market 
in buying supplies. 
For the general management : — 

To make the financial condition of the business 
known up-to-the-minute and at all times, as a guide 
to the policy of the concern. 

336. Fortunately these Ideals are not conflicting. 
"While the first and last call for promptness, none calls 
for other than approximate accuracy. A prerequisite 
of promptness is simplicity. Hence the required char- 
acteristics of any system of cost finding are approxi- 
mate accuracy and as much simplicity as is consistent 
therewith. 

337. Promptness is especially important to the fac- 
tory executive. If an order for one thousand pieces is 
going through the shop on which the standard cost of 
one operation is $1.00 per hundred, and he knows by 
the time the first hundred are completed that the 
actual cost is about $1.11, he has a chance to prevent 
the loss of $.99 on the remaining nine hundred; but if 
he does not know the cost until the whole thousand 
has gone through, even though he may then know that 
it was exactly $1,095, the information is too late to be 
of any practical value. 

338. For the factory executives the ultimate purpose 
of all cost finding is the operation of the plant on 



326 APPLYING EFFICIENCY PEINCIPLES 

Standard Cost. Moreover this is essential to all 
schemes of cost finding, because they are all based on 
the assumption that past cost equals present cost ; and 
unless costs are made to approximate predetermined 
standards, there is no assurance that this is correct. 
In order to accomplish the desired results, approxi- 
mate cost finding for the shop must be tied into the 
daily routine of its management in a manner which is 
explained in Articles 96, 102, 113, 114 and 129. 

339. In an industrial plant it may be necessary that 
the distribution of overhead expense on a theoretical 
basis should be readjusted in order to enable the busi- 
ness to meet competition. For example, one depart- 
ment may be handicapped by worn-out equipment 
which requires a large expense for maintenance. Such 
a condition probably ought to be terminated either by 
discontinuing the department or by equipping it prop- 
erly; but as long as it is allowed to continue, the 
charge to the department for maintenance of its equip- 
ment should be only such as would be required with 
good equipment, and the balance of the maintenance 
expense should be distributed to all the departments 
as part of the general indirect expense. If this is not 
done, the product of the department may have to be 
sold at a book loss. 

Such a redistribution of indirect expense must be 
made mostly by judgment and common sense ; but the 
following general principles may be of service. 

Indirect expense which tends to increase the value 
of a certain product should be charged to that product 
only, and should be added to its selling price, instead 
of being distributed as a general indirect expense; for 
example: A certain hotel is built about an interior 
hollow square. This square is a court in which an 



COST FINDING 327 

orchestra plays during dinner. The orchestra adds 
directly to the attractiveness of the dinner and of the 
interior rooms, whose windows look out onto the court, 
and this is substantially its only value to the business. 
The cost of the orchestra should be considered as a 
burden on the dinners served and on the interior 
rooms, and on them only, and its cost should be dis- 
tributed as an addition to the prices charged for them. 

Indirect expense which is merely accidentally con- 
nected with any product and which does not add to its 
value, should be distributed generally instead of being 
made a burden on that particular product. For ex- 
ample, the buildings of an industrial plant which look 
out on any important thoroughfare are usually more 
ornate and expensive than those in the interior of the 
plant. The rent of the departments which happen to 
be housed in these buildings should not be increased 
on this account, but the expense due to the ornamenta- 
tion of these buildings should be uniformly distributed 
as rent among all the departments. 

Errors of judgment and accidents should be paid 
for by distribution as part of the general indirect ex- 
pense. For example, if a large and expensive machine 
is bought and it is found practicable to operate it only 
a few hours a year, the whole actual rate on this ma- 
chine should not be concentrated on the small amount 
of product which passes through it; but this product 
should be charged only with such a machine rate as 
would have existed if a suitable machine had been 
installed, and the balance of the actual rate should be 
distributed to the general indirect expense. 

If a trolley car meets with an accident which causes 
heavy expense for repairs, that expense is not collected 
from the passengers who happen to be aboard at the 



328 APPLYING EFFICIENCY PEINCIPLES 

time; but it is distributed to the system as a whole, 
and a part of all fares collected is used to pay for it. 

Departments which are exceptionally favorably sit- 
uated may be made to help the business as a whole by 
being saddled with more than their proportionate 
share of the indirect expense. For example: if any 
particular product is manufactured by patented ma- 
chines which put them beyond competition by other 
makers who are unable to use these machines, this 
product may be arbitrarily burdened with as much 
overhead expense as it can bear and still hold the 
market at a reasonable profit in order to enable the 
rest of the product to meet competition more favor- 
ably. 

Conversely, departments which are very unfavor- 
ably situated may be relieved of part of their propor- 
tionate share of indirect expense, the amount of which 
they are relieved being distributed to the rest of the 
business. 

Care must be taken that such redistribution is not 
abused into causing the business to continue the manu- 
facture of a product on which it actually loses money 
or into causing it to fail to sell an article which it really 
can manufacture at a profit. We have here a case of 
that conflict of requirements which is familiar to every 
engineer in every part of his work. As in all conflicts 
of requirements, a working result can be reached only 
by a compromise guided by judgment and common 
sense. 

340. The details of cost finding are important to the 
person who actually does the efficiency work but may 
not interest the busy manager who delegates such de- 
tails to others. A general manager may therefore find 
it convenient to pass at once to Article 375. 



\i\'lOI CjUJUi/JO'eo 4'^!a J" 



tuidinbjjo uo!}di33jSq^> 



i ^JUOUJ/UfOl^ A>J Joqo7 J 
sbuipjing JO 
iiuous} oion -loj Jogo"} b 



ifilijiqoq^ijs/ioidujj i 



1 V 1 

% S '^ 




E IS 

PS! i 




~^5 


^^ III! 
1 ^ 1 ^ 

ti V & '^ 


in 


8*-* 

1 1 ;; 







^ 




* a ^2 ^ 


HlWl 1 


fell ^ 


li ; 


^. -i- \ 


ii ill ^ 

s ^ ; s s 1 


.1 





Miscellaneous 
Corrected Total f 


Rent 

Corrected Total t 


1 1 


V OH 




1 ,.."^1111111 


H. eopzsi '^'^ -^ e 



k Q ::3 tt Ki: 



^^2; kl 



ill 



-■iciok M-^S;'^ lO^OO^Cl >-J-^^Kl Ki-^a:Ci^^5;ki 



■^--.kKi: -~j-,^ki 



COST FINDING 329 

341. It is convenient to use a diagram in the form 
of Figure 7. It is shown in skeleton form only, as that 
is sufficient for explanatory purposes. 

342. Direct materials, direct labor, and direct use of 
equipment are those of which the cost can be directly 
attributed to any particular job, and which can there- 
fore be charged directly to that job as part of its cost. 

343. All other materials, labor and use of equipment 
are indirect, cannot be charged to any particular job, 
and their cost, commonly distinguished by the name of 
''overhead expense," is provided for in burdens on 
direct materials, direct labor and direct use of equip- 
ment. 

344. All costs are therefore expressed by the equa- 
tion : — 

Total cost = M(U + u) +H{W-]-w)-{- }i{E -f- e) (1) 

where M equals quantity of direct materials, 

IJ equals unit price of direct materials, 

u equals burden on direct materials, 

H equals man-hours of direct labor, 

W equals wage per man-hour, 

w equals burden on direct labor, 

h equals machine hours of direct use of equipment, 

E equals direct machine, or more properly, equip- 
ment rate, or hourly cost of running 
direct equipment, and 

e equals burden on direct equipment. 

The Cost Finding Diagram, Figure 7, is based on 
Equation (1). 

345. In the preparation of the diagram, the accounts 
are first listed in the top, or first line, and are given 
letter designations for convenient reference. 

346. Following the classification shown by the equa- 
tion all costs are divided, in the next to the top, or 



330 APPLYING EFFICIENCY PKINCIPLES 

second, line of the diagram, into the three blocks 
headed respectively 

Materials, 

Labor, and 

Equipment. 

347. The totals of the various accounts are shown at 
the top of the diagram. For example, in the second 
line, ''Materials Account, Supplies for Maintenance 
of Machinery," is account "i. Supplies for Maint. 
Mach. ' ' of the list of accounts in the first line. 

By reference in Figure 7 to the block "Equipment" 
in the second line and to the Hock ''hE," Cost of 
Direct Use of Equipment, in the third line, it is seen 
that in the last the only direct cost of equipment is 
the account x + y, "Direct Equipment Charges of 
Direct Departments," and by reference to the block 
"Equipment" of the second line and to accounts x + y 
of the first line, it will be seen that this consists of 10 
per cent depreciation and 6 per cent interest on the 
appraised value of the equipment which is directly 
used. 

348. Depreciation is impossible to estimate exactly, 
but the allowance for it should at least be large 
enough. A uniform allowance of 10 per cent on ap- 
praised value is commonly accepted as sufficient; but 
it is preferable that real depreciation should be more 
closely approximated. This is feasible by the applica- 
tion of the principle of Eecords, which is explained in 
Article 139. 

Interest on all appraised values is, of course, indis- 
putable. 

349. As a check, the totals of each line of blocks, 
except the fourth, are added up at the right, and must 
be the same in every line. 



COST FINDING 331 

350. The third line of blocks subdivides the three 
blocks of the second line for convenience of future 
reference, but the fourth line of blocks is filled out 
directly from the second, and without necessary refer- 
ence to the third. 

351. In the third line of blocks, all costs are divided 
into the direct classes, 

Direct materials, M U, 
Direct Labor, H W, and 
Direct use of equipment, h E; 

and all indirect costs, or "Overhead Expense," are 
classified as 

Power (including light and heat) 

Maintenance, 

Supervision, 

Eent, and 

Miscellaneous. 

352. In the practical classification into direct and 
indirect in this line, some variations from the defini- 
tion above given may be allowed as a matter of prac- 
tical experience, or to economize clerical labor. For 
example : nearly all the work of an overhead traveling 
crane is direct ; but, on account of the short time that 
the crane works on any one job and its continual mov- 
ing about, it would be prohibitorily expensive to keep 
accurate account of the use of the crane directly on 
jobs, or even to keep a list of the direct jobs on which 
it works. So it is customary and preferable to put all 
the cost of the crane into the overhead expense. 

353. The few costs which do not fall under any of 
the other classes are placed under Miscellaneous. For 
example. Account a under Miscellaneous, comes from 
''Labor" in the second line and is "Employers' Lia- 



332 APPLYING EFFICIENCY PRINCIPLES 

bility Insurance," found originally in the first line as 
Account a. 

354. Into the direct blocks, MU, HW and hE, of the 
third line are brought down simply the direct costs 
shown by the accounts at the head of each list in the 
blocks of the second line; for example, in the block 
MU is shown the sum of two accounts h and c of 
'* Direct materials" which appear at the head of the 
Materials list in the second line. It is easy to keep 
account of the direct costs and to charge them to jobs 
to which they are incident, with the exceptions similar 
to that noted in the ease of the traveling crane, Article 
352. The accounts themselves should therefore show 
these direct costs. 

355. Into each of the indirect blocks, "Power," 
"Maintenance," "Supervision," "Rent" and "Mis- 
cellaneous," in the third line are classified such ac- 
counts from "Materials," "Labor" and "Equipment" 
in the second line, as belong to it. For example, 
"Power" brings down from "Materials," account k 
for "Light, Heat and Power," purchased from out- 
side supply companies, this account having been orig- 
inally listed as that of a purchased material ; * ' Mainte- 
nance ' ' brings down from ' ' Labor ' ' account r, ' * Labor 
for the Maintenance of Machinery"; "Supervision" 
brings down from "Equipment" accounts I and m, 
"Supervision of Direct and Indirect Equipment," re- 
spectively; and "Rent" brings down from "Labor" 
account g, "Labor for Maintenance of Buildings." 

356. The fourth line carries out an investigation of 
the redistribution of the indirect charges through one 
another. This can be best illustrated by the diagram, 
Figure 8, which shows in graphic form the same facts 
as are shown in tabulated form in the Power block of 



COST FINDING 



333 



1^ 



/^OW£/f 1 


DSBIT 


CffEDIT 


ffenf 1 2,000 


/ /, 225 


Supervision 1. 000 


I.OZS 


Mainfenance 4, 600 


6.525 


Total X 600 


a 775 


1 


Balance 


/ I.I7S 1 




RENT 



MISCELL- 
ANEOUS 



FIG. 8. GRAPHIC DIAGRAM OF COST RELATIONS 



the fourth line of the Cost Finding Diagram. Though 
power itself is an item of indirect expense, we may 
classify this expense as direct-power expense and 
indirect-power expense, in accordance with the defini- 
tion of direct and indirect costs above given; that is, 
direct-power expense is expense that can be directly 
attributed to the generation or purchase of power (in 
this particular diagram, power includes light and heat) 
and which can therefore be charged directly to power 
as part of its cost; all other expense for power, for 
example power's share of the general administration 
of the business, which is part of a direct-supervision 
expense, are indirect-power expenses. 



334 APPLYIlsrG EFFICIENCY PKIISrCIPLES 

The total annual direct-power expense is $52 400. 
Of this a portion is distributed to all the other indirect 
departments. For example : light, heat and power to 
the general offices goes from power i into ''Super- 
vision" and becomes an indirect-supervision expense. 
The total of expense thus transferred from Power to 
Supervision is shown by Figure 8 as $1 025. 

Similarly there are indirect-maintenance expenses 
and indirect-rent expenses for "Power," all of these 
being of total amounts shown by the Credit side of the 
''Power" block of the fourth hue of the Cost Finding 
Diagram and by Figure 8. There happens in this case 
to be no exchange of expense between Power and 
Miscellaneous. 

Similarly there are indirect-power expenses for 
"Maintenance," "Supervision" and "Eent." Above 
is given an example of an indirect-power expense for 
"Supervision." The amounts of all these indirect- 
power expenses are shown both by the Debit side of 
the "Power" block of the fourth line of the Cost 
Finding Diagram and by Figure 8. 

As shown this interchange of indirect expenses gives 
power a credit balance of $1 175 and the net "Power" 
expense is therefore $52 400 — $1 175 = $51 225. 

It is theoretically necessary to make this investiga- 
tion, because the indirect expenses are not all dis- 
tributed to the different departments in the same 
ratio. For example: a department using a large 
amount of power may be housed in a cheap, small 
building. It should therefore be charged with a large 
part of the expense for power and with only a small 
part of the expense for rent. Therefore that part of 
the direct-power expense which is distributed to 
"Rent" as an indirect-rent expense should be dis- 



COST FINDING 335 

tributed to this department in a much smaller propor- 
tion than should the corrected expense for power. 

Similar considerations apply to the redistribution 
of the expenses for "Maintenance," "Supervision," 
"Eent" and "Miscellaneous"; and this redistribution 
is carried out in the fourth line of blocks of the Cost 
Finding Diagram, Figure 7. 

357. If it could be foretold that any block of indirect 
expense of the third line would be no more affected 
than power here is, by the redistribution of the fourth 
line, this redistribution could be omitted with practical 
accuracy ; but this is merely a working approximation 
for which there is no theoretical justification. 

358. The quantitative distribution of expense is a 
matter of much difficulty, and must be accomplished 
rather by good judgment than by strict adherence to 
any theory. First, such information as is possible 
should be derived directly from the accounts. Second, 
any expense should be distributed to any classification 
as a first approximation, as nearly as possible in pro- 
portion to its actual use of that expense. Finally, the 
details must be readjusted in accord with good judg- 
ment and common sense. See Article 339. 

359. As an aid in the distribution of "Power" in 
proportion to its actual use, the lower part of the 
"Power" block of the fourth line gives a distribution 
of horse-power-hours into steam, electric, gas and 
hydraulic. 

360. The fifth line of the diagram shows the dis- 
tribution of direct and indirect costs to direct ma- 
terials and to the several direct departments. 

361. "MU," direct materials, will be shown for any 
job by the "Material Service Card" discussed in Ar- 
ticle 114, and the overhead "Mt*" on direct materials 



336 APPLYIN^G EFFICIENCY PRINCIPLES 

will be uniformly distributed over all materials, so it 
is unnecessary to distribute "M^*" to departments. 

This uniform distribution of the overhead '^Mu" to 
all materials is in direct proportion to their purchase 
price. In th^e block "Mu" in the fifth line, it will be 
seen that the final burden on direct materials is 3.2 per 
cent, that is, material whose purchase price was $1.00 
will be charged to the job by the Cost Department at 
$1,032. 

This method of charging is evidently only a con- 
venient working approximation, since heavy, bulky 
materials of small unit value would usually cost more 
for handling and storage in proportion to their value, 
than would small light materials of large unit value. 
Where the burden on direct materials is so small as in 
this case, the error in any case evidently can not be 
large ; but if this burden were larger it might be neces- 
sary to distribute it more accurately. 

362. Similarly the amount of direct labor {HW) to 
be charged for any job will be shown by the labor 
service cards discussed in Article 96; but the burden 
{w) on labor will probably not be uniform in all de- 
partments, and "HW" should therefore be distributed 
to departments at this point as a guide to the determi- 
nation of the burden on labor for every department. 

363. The distribution of " hE, " diiQci use of equip- 
ment, should, as a first approximation, be determined 
as the sum of interest on investment for, and deprecia- 
tion of, the direct equipment of any department. It 
may even be carried so far as to have a separate 
charge for every machine ; but, as a matter of practical 
convenience and economy of clerical labor, it is seldom 
practicable to carry this to a greater refinement than a 
separate rate for each department. 



COST FINDING 337 

364. The theoretical distribution of "Power" to 
departments should charge each with the corrected 
expense for the number of horse-power-hours which 
it uses. A practical difficulty at this point is the de- 
termination of this consumption, which is apt to re- 
solve itself into making the best estimate possible 
from the information available. The more general use 
of meters of all kinds would doubtless pay as a means 
to the more accurate determination of costs and elim- 
ination of wastes. 

In the distribution of Power to Labor and Equip- 
ment of the several departments in the fifth line, Labor 
should be charged theoretically, with light and heat, 
and with power for ventilation, and usually with power 
for the operation of hand tools, such as pneumatic 
hammers ; while Equipment should be charged with all 
other power. 

365. The actual fact probably is that the amount of 
indirect expense for supervision that is due to any 
department is in a proportion somewhere between a 
direct ratio to the total of its direct pay roll, and a 
direct ratio to the total number of its direct workers. 
A skilled worker, whose tasks require the attention of 
the Engineering Department for the preparation of 
drawings, and of the Planning Department to have 
everything ready for his work, certainly occasions 
more expense for such supervision than does an un- 
sldlled laborer. On the other hand, the superior in- 
telligence of the skilled man may diminish the amount 
of disciplinary and sanitary supervision that he may 
require, below that of the cheaper unskilled man. For 
simplicity, expense for supervision ought to be dis- 
tributed in proportion to direct pay roll, or in propor- 
tion to number of direct workers, whichever seems to 



338 APPLYING EFFICIENCY PEINCIPLES 

be more nearly correct for the case in hand, unless 
such distribution would evidently cause substantial 
error, in which case some intermediate proportion 
should be adopted. 

The distribution of Eent is first approximated theo- 
retically by distributing to each department a share 
of the yard space, as nearly as possible in proportion 
to its use thereof, and charging it ground rent in pro- 
portion to the space used by it; and by distributing 
the rent of any building to the departments housed in 
it, in proportion to the space which they occupy. 

366. Whatever redistribution of any indirect expense 
may be made as suggested in Article 339, the total 
of indirect expense provided by the distribution must 
not be altered. For example : in the third line of the 
diagram, ''hE/' the cost of direct use of equipment 
totals (x -\- y) ]. and however much the amount charged 
against each department in the original theoretical 
layout of the fifth line may be altered, the total of the 
cost so provided for must remain the same. The neces- 
sity of this is evident from the fact that this expense 
actually exists in the business; and, in some way or 
other, it must be provided for and must be recovered 
in the sale of the product. 

367. In the diagram, the final distribution of the 
total of any indirect expense allocated to labor or 
equipment has been made in the fifth line, to the sev- 
eral departments. It is usual to make these dis- 
tributions in proportion to their total direct pay roll, 
and in proportion to the total appraised value of their 
direct equipment respectively. This assumes that any 
skilled mechanic earning 40 cents an hour causes twice 
as much indirect expense as any laborer earning 20 
cents an hour, and that any machine appraised at 



COST FINDING 339 

$10 000 causes twice as much indirect expense as any 
machine appraised at $5 000. Evidently this cannot 
be in exact accord with the facts, but it makes the prac- 
tical cost keeping very convenient; and hence, in ac- 
cord with the principle of simplicity, it may be used, 
unless it is known to be too far from the truth for a 
working approximation. 

368. The blocks of indirect expense. Power, Mainte- 
nance, Supervision, Eent and Miscellaneous, of the 
fourth line are now brought down into the blocks of 
the fifth line and therein redistributed to "MU," di- 
rect materials, and to the several departments, being 
distributed in any department between labor and 
equipment. 

369. The expenses of any direct (commonly called 
productive) department, for Power, Maintenance, 
Supervision, Kent and Miscellaneous, shown by the 
blocks in the fourth line to be chargeable to labor, are 
totalled and constitute the burden on direct labor for 
that department. 

It will be noted that this distribution for Depart- 
ment 1 is by a uniform percentage of 54.5 per cent on 
all direct wages; that is, $1.00 direct wages on any 
job in that department will be charged to that job by 
the cost department as $1,545. This method of dis- 
tribution is discussed in Article 367. 

370. The expenses of any direct department for 
Power, Maintenance, Supervision, Eent and Miscel- 
laneous, as shown by the blocks in the fifth line to be 
chargeable to equipment, are totalled and constitute 
the burden on equipment for that department. 

It will be noted that this distribution for Depart- 
ment 1 is by a uniform percentage of 666 per cent on 
all direct machine rates. That is, any job in that de- 



340 APPLYING EFFICIENCY PKHsTCIPLES 

partment which is done on a machine whose hourly 
rate is $1.00, will be charged by the Cost Department 
with $7.66 for the use of the equipment. See Article 
367. 

371. If the uniform distribution of the indirect ex- 
pense to labor and equipment has been altered in re- 
adjustment to meet competition, as suggested in Ar- 
ticle 339, it is evident that the distribution to direct 
wages and direct equipment in the fifth line of Figure 
1 would have to be made in accord with the distribution 
actually followed. As any non-uniform distribution 
would complicate the accounting and increase its ex- 
pense, and would also increase the chances of clerical 
error in the determination of cost for any job, it is 
evident that the uniform distribution should be used, 
unless there is a good reason to the contrary. 

372. In the fundamental equation, the quantities, 
u, w, e and E have been evaluated by the above process. 

To determine the cost of any job, it remains to eval- 
uate M, U, H, W and h. 

M, the quantity of the materials directly used; H, 
the man-hours of direct labor used on the job ; W, the 
average hourly wages of the men directly employed 
on the job; and h, the hours of direct use of every 
machine ; must therefore be reported from the shop to 
the Cost Department immediately upon the conclusion 
of any job. U, the unit purchase price of all materials 
directly used, must also be immediately known to the 
Cost Department, and this information may come 
from the shop, from the Purchasing Department, from 
the Stores-keeping Department, or from the files of 
the Cost Department itself as is most convenient ; but 
some definite and positive means of bringing it to the 
knowledge of the Cost Department immediately upon 



COST FINDING 341 

the conclusion of any job must be provided and 
standardized. 

M, H, W and h are conveniently and automatically 
reported to the Cost Department by means of Labor 
and Material Service Cards, described in Articles 96 
and 114, respectively. 

373. In a plant where there is very little direct labor 
without the simultaneous direct use of equipment, very 
approximately H equals h, and the fundamental equa-^ 
tion can be written 

M(Z7 + w) -\-HiW-\-w-\-E-{-e) = Total Cost. 
Then, ii B = w-\-E-{-e 
the fundamental equation can be written: 
M{U-j-u) +B'(W + S)= Total Cost. 

which assembles all the labor and equipment charges 
other than direct wages into one burden on the last. 
It will then be sufficient for the Labor Service Card to 
report H and W for any job, B being already known 
in the administrative offices concerned. 

374. It is well known that overhead expense con- 
tinues at nearly a uniform rate per unit of time, re- 
gardless of the amount of business being done; that 
is, it varies directly with time. Therefore in cost 
finding, it must be distributed in proportion to time. 
It will be noted that this is done in the Cost Finding 
Diagram, Figure 7, except in the case of the overhead 
on Materials. As this is usually a small part of the 
total overhead, distribution according to value of di- 
rect materials is used for simplicity; but in the dis- 
tribution of the important overhead on labor, the time 
rate should be used. For this reason, in the prepara- 
tion of the diagram, it was assumed for simplicity 
that labor was paid on time rates. Where labor is 



342 APPLYING EEFICIENCY PKINCIPLES 

paid on piece rates, the labor requisitions would be 
required for purposes of planning and despatching, 
transportation, pay roll and inspection, no less than 
when labor is paid on time rates; and these requisi- 
tions should, in either case, be made the means of re- 
cording H, the man-hours of direct labor expended on 
every job. The overhead on labor should then be de- 
termined by multiplying H by w, the burden on direct 
labor, instead of by multiplying the piece rate earn- 
ings on the job by burden coefficient as is commonly 
done. 




PIG. 9. GRAPHIC DIAGRAM OP BUSINESS FLUCTUATIONS 

375. Business fluctuates in a series of irregular 
pulsations about a mean line (Figure 9). This intro- 
duces into the problem of cost finding for the account- 
ant, the sales manager and the general manager, a 
complication which Gantt states thus : — 

If the factory is running at its full, or normal capacity, this 
item of indirect expense per unit of product is usually small. 
If the factory is running at only a fraction of its capacity, 
say one-half, and turning out only half of its normal product, 
there is but little change in the total amount of this indirect 
expense, all of which must now be distributed over half as 
much product as previously, each unit of product thereby 
being obliged to bear approximately twice as much expense 
as previously. 

When times are good and there is plenty of business, this 
method of accounting indicates that our costs are low; but 



COST FINDING 343 

when times become bad and business is slack, it indicates high 
costs due to the increased proportion of burden each unit has 
to bear. During good times, when there is a demand for all 
the product we can make, it is usually sold at a high price 
and the element of cost is not such an important factor. When 
business is dull, however, we cannot get such a high price for 
our product, and the question of how low a price we can 
afford to sell the product at is of vital importance. Our 
cost systems, as generally operated at present, show under 
such conditions that our costs are high and, if business is 
very bad, they usually show us a cost far greater than the 
amount we can get for our goods. In other words, our pres- 
ent systems of cost accounting go to pieces when they are 
most needed. 

376. The engineer's way of dealing with such fluctu- 
ations as are shown in Figure 9, is by means of a fly- 
wheel. Such a fly-wheel can be introduced into cost 
finding by figuring the overhead and the burden ratios 
from the accounts for at least the complete period of 
one cycle, as from A to C, Figure 9. The burden 
ratios, so determined, are the average of all conditions 
of the business, during both good and bad times. 

Then in the routine of the Cost Department, all 
service cards should be figured daily to show how 
much overhead expense has been collected on them, 
and a summary should be made at the end of the 
month showing the total service card earnings of over- 
head expenses for the month. 

We now have three items for consideration, viz: — 
Standard Allotment, 
Actual Expenses paid, and 
Overhead, collected on service cards. 

Assume that the following amounts are shown : 

Standard Actual Overhead 

Allotment Expenses Collected 

$100 000. $110 000. $112 000. 



344 APPLYING EFFICIENCY PRINCIPLES 

Such a statement would indicate that Standard 
Costs had not been realized, but on the other hand, 
$2 000 more overhead had been collected than had 
actually been spent, indicating that the burden per- 
centages set up on the cost diagram were dependable. 
The $2 000 over collected, should be credited to an 
account called ''Factory Adjustment Account." 

The next month's statement might give the follow- 
ing figures : — 



Standard 


Actual 


Overhead 


Allotment 


Expenses 


Collected 


$100 000. 


$108 000. 


$107 000. 



This would indicate that actual expenses had begun 
to take a downward course toward the Standard Allot- 
ment ; but, on the other hand, $1 000 less overhead had 
been collected than had been actually spent. This 
$1000 would be charged to "Factory Adjustment 
Account. ' ' 

At the end of the year, if the ' ' Factory Adjustment 
Account" showed a net credit of, say, $2 000, this 
amount would be credited to Surplus Account. On 
the other hand, if "Factory Adjustment" shows a net 
debit of $2 000, then this amount should be charged 
to Surplus Account and Factory Adjustment Account 
closed. 

The Surplus Account thus serves exactly the pur- 
pose of a fly-wheel, as it is a reservoir of business 
energy, in which excess revenue is stored during good 
times, and from which it can be withdrawn to meet 
the demands of the business in dull times, when rev- 
enues fall below operating costs. 

377. However, in order that a fly-wheel may per- 
form its function satisfactorily, it must be supple- 



COST FINDING 345 

mented by an automatic governor; and this business 
lacks. 

The mean line of Figure 9 is not horizontal, but 
follows a somewhat irregular course, according to the 
average economic state of the world. Ordinarily it 
tends gradually upward, because of the gradual gen- 
eral increase of wealth; but when there is a general 
destruction of wealth, such as is occurring now, it 
drops to a lower level, from which it again tends slow- 
ly upwards, as wealth is again accumulated. 

378. Where there is no governor which automati- 
cally adjusts output to such fluctuations of demand, 
the only resource is control by human intelligence; 
and in order that the business management may exer- 
cise this, it is necessary that it should be supplied with 
correct and adequate information, not only as to the 
average condition covered by the last complete cycle, 
from A to C, but also with reference to the fluctua- 
tion occurring at the moment. 

In the first place, due to the gradual upward tend- 
ency of the Mean Line of Figure 9, no cost diagram 
would be permanently useful, even if business should 
never depart from normal. A Cost Diagram should 
therefore be made ordinarily at least once a year, 
taking on the last annual period and dropping off 
some period in the past, according to judgment; but 
in case departments are rearranged and accordingly 
use altered amounts of floor space or labor, or in case 
there are any other great changes in buildings, equip- 
ment or methods, it would be necessary to prepare a 
new diagram as often as such changes occur. 

379. In cost finding for the purpose of laying out a 
campaign of efficiency work, the Ideal must evidently 
be to ascertain costs as they actually are at the time 



346 APPLYING EFFICIENCY PEINCIPLES 

such a campaign is begun; and for this reason the 
accounts on which a diagram for this purpose is based, 
should evidently not go further into the past than is 
necessary to cover the seasonal fluctuations to which 
the business is regularly subject in normal times ; and 
for special reasons it may be desirable that they 
should cover even less time. For example, though this 
is written less than one year after the outbreak of the 
war, it is evident that that event produced a drop in 
the Mean Line of the Figure 9 similar to that from 
C to D, and that burden ratios based on the condition 
of business prior to C, would in most cases be far 
from those actually existing now. 

In order to achieve the Ideals of the sales manager 
and the general manager, as they are stated at the 
beginning of this chapter, it is necessary that they 
should know, not only the average condition of the 
business, but also as nearly its momentary condition 
as possible. It is therefore necessary that they should 
be supplied with costs figured not only by burden 
ratios derived from a complete business cycle from 
A to C, but also from the period from D to the pres- 
ent, and perhaps from even a shorter period of the 
most recent past. 

The last case occurs, for example, in the confection- 
ery business. The principal raw materials, flour and 
corn syrup, are continually fluctuating in price on the 
market, and the demand for the product is seasonal. 
It is therefore necessary for the management to know 
at all times how cost of the product is affected by 
variation in the price of either of these materials and 
by storage for any period of time before sale. The 
means that have been adopted in some cases to accom- 
plish this have been the determination of standard 



COST FINDING 347 

costs of flour and of corn syrup and of standard bur- 
den ratios from the complete business cycle just past, 
and supplementing these by tables showing the effect 
on costs, of variations by fractions of a cent in the 
prices of flour and corn syrup, and of varying periods 
of storage. This information enables the management 
to judge, for example, whether a low price of raw ma- 
terials in February would justify laying in a large 
stock of them, if the sale of the finished product is not 
expected before the Christmas demand comes on. 



Chapteb XVII 
ESTIMATING FINANCIAL RESULTS 

380. 

GANTT relates the following incident : — ' ' A man 
found that his cost on a certain article was 30 
cents. When he found that he could buy it for 26 cents, 
he gave orders to stop manufacturing and to buy it, 
saying he did not understand how his competitor could 
sell at that price. He seemed to realize that there was 
a flaw somewhere but he could not locate it." Gantt 
continues the story thus : — 

I then asked him what his expense consisted of. His reply 
was, labor 10 cents, material 8 cents and overhead 12 cents. 
My next question was : Are you running your factory at full 
capacity ? and got the reply that he was running it at less than 
half its capacity, possibly one third. The next question was : 
What would be the overhead on this article if your factory- 
were running full ? The reply was that it would be about 5 
cents ; hence the cost would be only twenty-three cents. 

The possibility that his competitor was running his factory 
full suggested itself at once as an explanation. ^ 

The next question that suggested itself was how the 12 cents 
overhead, which was charged to this article, would be paid 
if the article was bought. The obvious answer was that it 
would have to be distributed over the product still being 
made, and would thereby increase its cost. In such a case it 
would probably be found that some other article was costing 
more than it could be bought for ; and if the same policy were 
pursued, the second article should be bought, which would 
cause the remaining product to bear a still higher expense 
rate. 

348 



ESTIMATING FINANCIAL RESULTS 349 

If this policy were carried to its logical conclusion, the 
manufacturer would be buying everything before long and 
be obliged to give up manufacturing entirely. 

Gantt's manufacturer made the common error of 
assuming that, if any direct expense were stopped, the 
overhead allocated to it would thereby be stopped also. 
This may result in some cases; but in so many cases 
it does not that, in estimating from our preliminary 
investigation the feasible economies, we must not 
make such an assumption, unless further investigation 
shows it to be correct. 

381. In the main, overhead will remain constant re- 
gardless of increased production so that, if we can 
count on increasing production, we can also count on 
reducing in inverse ratio the overhead to be carried 
by every article. 

With reference to some parts of the overhead, not 
even this is true. For example: of the power, the 
part due to driving shafting and belts will remain 
about constant regardless of production, but the rest 
will increase in approximately direct ratio to the pro- 
duction, and the effect of this increase on the load 
factor of the generating plant will also have a large 
influence upon the unit cost of power. 

It is pointed out in Article 332 that increased cost 
of supervision must usually be assumed as a result of 
the betterment work itself, and that this must be al- 
lowed for in the estimate. 

It was also pointed out in Article 329 that savings 
on labor must be shared with the workers, by paying 
them some form of efficiency reward, which for the 
purpose of the preliminary estimate might be assumed 
as 20 per cent of average time rates of the local labor 
market, for their respective classes of labor. 



350 



APPLYING EFFICIENCY PEINCIPLES 



a? 






oj 5 Jr! 






02 



<^ S fl 

S 4) O 



05 ^. *- 

O) ra M 



T 

fa's M 

03 *3 O 
4S 03f-) 







CCrtKNTHCq 



SOOQCIQO 
IM lO 03OU5 
O ■^ (D 00 lO ■* rH 

t-, to W5 CD O r-( (N 




»-< «0 CO <-l »-< 
COQC5(N OS 
05 O 40 05 OS 
C^ OOO 00 

1-1 T-K 






lO l><3SOO<N>0 

1> CO IC t-- O (N <N 

T*l OS »-H OS »0 1-1 CO 

r-< OOCCOCOiCOS 



b-i-iOQ(N QO 
CO(N OOOOQ 
CO O lO m i-H CD O 
tH O ■* I-- CO rH »0 
■rH CD T-H CO rfi r-i 



€^ 



»-4 CO CO T-< tH 

CO Q OS (M OS 



C<l lO t^ CO O (N O 

OS OS lO "—I OS OS Q 



»C O O O iC »0 Q 
t^OOI>Q(NiN Q 
CO .-I -"l^ O (N (N O 
O CO lO T-4 ,-( 1-H lO 
CO CO (N CO ifl C^ 



tMIMCO'^'O 

^a .+J +3 +a +» 

d a c a 

CJ 0^ 1> 4> Q? 

aaaaa 

^J -Li ^J +3 +S 

- • ^ ^ ^ CS ^ 

+? 0,0. &c ftfu 
« <u a> a; « a> 

Q 



I (3 



g 



aj B o o 
CO M 03. S fl 






ESTIMATING FINANCIAL RESULTS 351 

382. Investigation having determined the approxi- 
mate efficiencies and amounts of the various costs, the 
feasible saving results at once from the equation : — 

8 = (l. — E), in which 
C = cost, 

E = existing efficiency, and 
S = feasible saving. 

The resulting estimate may be conveniently sum- 
marized in the form of Table 15. 

383. The data of Table 15 are derived from the Cost 
Finding Diagram, Figure 7, as follows : — 

TABLE 15 FIGURE 7 

Cost of From 

Direct Materials Third line, Block MU 

Direct Labor, Total Third line. Block HW 
Direct Labor 

Distribution to Departments Fifth line. Direct Departmente 

Direct Use of Equipment Third line, Block hE 

Power Fourth line. Corrected Total 

Supervision Fourth line, Corrected Total 

Maintenance Fourth hne. Corrected Total 

Rent ^ Fourth Une, Corrected Total 

Miscellaneous Fourth Une, Corrected Total 

384. Some explanation of the calculation of the table 
may be desirable. 

For illustration, suppose the number of direct work- 
ers in the direct departments, 1 to 5, to be as follows : — 



Department 1 


120 


Department 2 


90 


Department 3 


70 


Department 4 


60 


Department 5 


75 



Taking for example, Department 1 ; efficiency of use 
of direct labor determined as explained in Article 327 
is 71.5 per cent. Efficiency of supply of direct labor, 



352 APPLYING EFFICIENCY PRINCIPLES 

determined according to Article 328, is 98 per cent. 
Eeferring to Article 329, the direct workers are paid 
on time rates equal to the market rate of wages. We 
must figure on paying them 20 per cent bonus at 100 
per cent efficiency. Therefore efficiency of price of 
direct labor is 120 per cent. As recommended in Ar- 
ticle 330, the preliminary estimate of the efficiency of 
distribution of labor is 100 per cent. Then the effi- 
ciency of direct labor is 

.715 X .98 X 1.2 X 1. = .84, or 84 per cent. 

Since efficiency of supply is 98 per cent and efficiency 
of use is 71.5 per cent, the output from Department 1 
is only 71.5 X .98 = .7 of what it would be if both 
these efficiencies were at 100 per cent. 

The products of these two efficiencies in the several 
departments are as follows: — 

Department 1, 70 per cent 

Department 2, 68 per cent 

Department 3, 65 per cent 

Department 4, 82 per cent 

Department 5, 67 per cent 

Then weighting these products in proportion to the 
number of direct workers in the respective depart- 
ments, the average value of the product is 70 per cent. 
The accounts on which Table 15 is based are sup- 
posed to cover one year, during which time the 415 
direct workers were employed for 1 245 000 man- 
hours, but their output was only that of 1 245 000 X .7 
= 871 500 standard man-hours. We may therefore 
call the actual output 871.5 units, and that of the same 
force at 100 per cent efficiency of supply and use 1245 
units. 

386. Then Department 1, having an actual direct 



ESTIMATING FINANCIAL RESULTS 353 

pay roll of $80 561 at 84 per cent efficiency, at 100 per 
cent and no increase of production, would have ^ 

$80 561 X .84 = $67 600. 

The feasible saving at 871.5 units of production is 
then $80 561 — $67 600 = $12 961. 

If the production is increased to 1245 units, at 84 
per cent efficiency, the direct labor cost is increased in 
the same proportion, so that annual cost of direct 
labor = 

80 561X-5#|=$115 000, ! 

in round numbers. 

Similarly at 100 per cent efficiency and 1245 units 
of production annual cost of direct labor = 

1245 
$67 600 X ^V^ = $96 500, 

in round numbers. 

The feasible saving at 1245 units of production is 
then $115 000 — $96 500 = $18 500. 

The figures for Departments 2, 3, 4, 5 and A are 
similarly calculated. 

387. Direct Materials are represented as having an 
efficiency of 92.5 per cent. This does not mean that 
only 7.5 per cent of the original material goes into 
scrap. The figure of 92.5 per cent efficiency might be 
reached as follows : 



Wages = $80 561 X . 7 = $56 392 . 70 

Bonus = 56392.70 X. 2= 11274.54 



Total direct pay roll = $67 677 . 24 

. «= • 67677.24 „. 
Present efiBciency = an 561 " ^^ '*"*' 



354 APPLYING EFFICIENCY PEINCIPLES 

TABIiE 16 

Per Year at Production 
of 871.5 units 

t • , 

Actual Standard 

Cost of materials worked into main product $212 500 $212 500 

Ck>Bt of materials worked into by-product 4 400 4 400 

Scrap 72 000 32 800 

Bonus to cutters of direct materials (See Article 

302) 10 560 

Cost of direct materials $288 900 $260 260 

Credit 

Amount realized annually by sale of scrap '. $26 400 $16 747.50 

Saving in coal by burning scrap under boilers 2 125 2 125 

Total Credit $28 525 $18 872.50 

Cost of direct materials 288 900 260 260 

Credit to direct materials 28 525 18 872.50 

Net cost of direct materials $260 375 $241 387 . 50 

Efficiency of direct materiala 92.5 100 

per cent. per cent. 

Per Year at Production 
of 1245 Units 

, « » 

At 92.5 per 
cent. Efficiency Standard 

Cost of materials worked into main product: 

$212 500 X^^ $303 000 $303 000 

871.0 

Cost of materials worked into by-product: 

$4 400 X^^ 6 290 6 290 

871. o 

Scrap: 

$72000 X^^ 103000 

$32800 X^^ 46900 

Bonus to cutters of direct materials 15 150 

Cost of direct materials $412 290 $371 340 



ESTIMATING FINANCIAL RESULTS 355 

Credit 
Amount realized annually by sale of scrap: 

$26 400 X ^^ $37 800 

$16 747.5 xj^ $23 900 

Saving in coal by burning scrap under boilers .... 3 040 3 040 

Total credit $40 840 $26 940 

Cost of direct materials 412 290 371 340 

Net cost of direct materials $371 450 $344 400 

I 

388. At a production of 871.5 units, the unit cost of 
direct use of equipment is $63 180 -~ 871.5 = $72.50. 
At the same efficiency a production of 1245 units would 
cost $72.5 X 1245 = $90 200. The efficiency of this ex- 
pense being 95 per cent, its annual amount at a produc- 
tion of 871.5 units is reducible to $63180 X .95 = 
$60 021. In the hypothetical case of Table 15 it is sup- 
posed, to be on the safe side, that the increase of 
production from 871.5 to 1245 units will increase the 
depreciation to such an amount that the standard cost 
of direct use of equipment will rise to $63 780. There- 
fore, if efficiencies are raised to 100 per cent, and the 
entire improvement is used to increase production, the 
effect on the cost of direct use of equipment equals an 
annual saving of $90 200 — $63 780 = $26 420. 

389. At a production of 871.5 units, the unit cost of 
maintenance is $25 470 -~ 871.5 = $29.05. At the same 
efficiency, a production of 1245 units would cost 
$29.05 X 1245 = $36 400. The efficiency of mainte- 
nance being 57 per cent, the annual cost of mainte- 
nance at a production of 871.5 units is reducible to 

$25 470 X .57 = $14 500. 
It is supposed that the increase of production from 
871.5 to 1245 units will involve an increase of the 



356 APPLYING EFFICIENCY PRINCIPLES 

standard cost of maintenance in the same proportion, 
making the annual standard cost at 1245 units, $20 750. 
Therefore, if efficiencies are raised to 100 per cent, 
and the entire improvement is used to increase pro- 
duction, the effect on the cost of maintenance is equiva- 
lent to an annual saving of 

$36 400 — $20 750 = $15 650. 

390. $6500 more of supervision per year is esti- 
mated as necessary to secure 100 per cent efficiency 
at either rate of production. 

391. Since power includes light and heat, the an- 
nual cost of power at 1245 units of production and 
100 per cent efficiency will only very slightly exceed 
that at 871.5 units and 100 per cent efficiency. To be 
safe it is estimated at $50 000. 

392. There is no reason why rent or miscellaneous 
expenses at 100 per cent efficiency should increase with 
production within the limits of Table 15. 

393. An increase of production from 871.5 to 1245 
units would increase sales to 

$870 000 X (1245 ^ 871.5) = $1243 000, 
if the larger output could be sold at the same unit 
price; but it is estimated that, in order to induce the 
market to absorb it, it will be necessary to reduce the 
selling price 5 per cent, so that the total annual sales 
at the larger production are only $1 180 000. Some 
such allowance is usually necessary for a conservative 
estimate. In other words, beside the employer and 
the employee, there is a third party to all improve- 
ments, which we call the customer, the consumer, so- 
ciety, the State, or the government, according to cir- 
cumstances. This party must be allowed a share in 
the benefits, and the Fair Deal therefore requires that 
it should also share in the burdens. 



Chapter XVHI 
SELECTION OF THE POINT OF ATTACK 

394. 

AS soon as Table 15 has been prepared, we are in 
position to select the place at which to begin 
work. The governing consideration is usually that the 
work must begin to pay for itself as soon as possible. 
And this generally leads to the selection of the best 
prospect for saving an appreciable sum of money in a 
short time. 

395. Eeferring to Table 15, the efficiency of Mainte- 
nance is the lowest shown ; and, the lower the efficiency, 
the easier it usually is to increase it. The estimated 
feasible saving, between $10 970 and $15 650 per year, 
is considerable; and an increase in the efficiency of 
maintenance would be likely to increase the efficiency 
of labor, of direct use of equipment, of power, and 
perhaps also of materials and supervision. Hence it 
is very likely that Maintenance would, in this case, be 
the best place to begin work. Whether or not this 
were the case, would depend very much on the diffi- 
culty of the measures necessary to increase the effi- 
ciency of maintenance and the time required to put 
them into effect. 

396. Near the other extreme, the estimated feasible 
annual saving on rent varies from $9 625 to $61 400, 

357 



358 APPLYING EFFICIENCY PEINCIPLES 

according to production; but the efficiency of rent is 
already 92 per cent, and, when the efficiency gets that 
high, it is harder and harder to get every additional 
per cent. Also the possibility of saving more than 
$9 600 on rent is dependent on increasing production, 
which is to be accomplished mostly through increase 
of the efficiency of labor. 

Usually, other things being equal, the earlier the 
step in the process on which one can begin work, the 
easier the work is and the greater benefits the work 
produces elsewhere. 

397. The question of Personnel has a very great 
and often a dominant influence in the selection of the 
point of attack. Referring to Article 383, Table 15: 
Department 1, coming at the beginning of the process 
and having an efficiency of labor of only 84 per cent, 
and an estimated feasible annual saving between 

•$12 961 and $18 500, seems to offer a very good pros- 
pect for prompt results; but this may be completely 
nullified by the opposition of its foreman. If he does 
not co-operate in the work of betterment, still more if 
he opposes it, and the general management tolerates 
this attitude, one may be reduced to persuasion as a 
means of improving the efficiency of labor. By setting 
before a workman reasonable standards and offering 
him the prospect of increased earnings, if he makes 
good on them, it is possible to accomplish results in 
time by persuasion only, and against opposition; but 
the work goes very slowly under such conditions. 

398. The great importance of the principle of Per- 
sonnel may often make it desirable to begin with 
materials. 

Another efficiency engineer told me of a plant in 
which merely starting an investigation of the efficiency 



SELECTING THE POINT OP ATTACK 359 

of materials in a certain department, led to an imme- 
diate threat of a strike. Considerable gold leaf was 
used in this department, and it was found later that 
the foreman was in the habit of stealing it and selling 
it to a junk dealer. He afterward bought back the 
gold leaf for the plant at a low price, and got great 
credit with the concern for buying gold leaf cheap. 
As soon as an investigation was started in his depart- 
ment, he induced the workmen to threaten a strike. 
Where any such graft is going on, attempts to work 
on materials are sure to meet strong opposition; but 
ordinarily no one about the plant has any objection 
to saving materials. 

The workmen and minor executives upon whose skill 
and judgment the saving of materials depends, can 
often be paid a bonus on the economies which they 
effect. This affords an opportunity to demonstrate to 
the workers, at the outset, that the work is for their 
benefit as well as for that of the owners, and thus to 
secure their co-operation. 

Materials come right at the beginning of the proc- 
ess, and have the determining effect upon other effi- 
ciencies due to that position. Faulty supply of ma- 
terials may hold up manufacturing orders, throw 
planning and despatching into confusion, and cause 
serious money losses due to delays. Defective or 
improper materials may cause damage to machines 
and tools, loss of product well advanced in manufac- 
ture, faulty finished product, dissatisfaction of the 
customer, and loss of reputation and of business. For 
these reasons also they have strong claims to early 
attention. 

One objection to starting with materials is that their 
efficiency is ordinarily high ; but, if the annual bill for 



360 APPLYING EFFICIENCY PEINCIPLES 

materials is large, there may be a prospect of suffi- 
cient money saving to lead, in combination with the 
other reasons stated, to the selection of materials as 
the part upon which to begin work. 

Certain features of the work on materials, for ex- 
ample the preparation of correct specifications and the 
installation of adequate inspection, may take consider- 
able time and require considerable expense. These 
are objections to initial work on materials, but it is 
seldom that any line of work at any time can be 
brought to 100 per cent efficiency without intermediate 
work elsewhere. 

399. In fact, just what is the beginning of the proc- 
ess depends upon the point of view. As to manufac- 
turing processes, the first thing is raw materials ; but, 
as to labor, it is employment; and, as to orders, it is 
planning. Hence, even after selecting a department 
in which to begin work, one would have at least three 
starting points from which to choose — the employ- 
ment of its labor, the supply of its materials, and the 
planning of its work. One can readily imagine others. 
I have known a case in which tool-room service re- 
quired first attention. Usually the line which offers 
the best prospect of appreciable money saving soon, 
is the one to follow first. 

400. The manufacturing process seldom flows in an 
uninterrupted even stream from raw materials to fin- 
ished product. There are eddies and back waters in 
it. An article may go to the final assembly depart- 
ment, and then come back to the first department for 
some operation. Thus, while the efficiency of depart- 
ments early in the process strongly affects that of 
departments which come later, inefficiencies in the 
latter also disturb the efficiency of earlier ones. 



SELECTING THE POINT OF ATTACK 361 

401. For these reasons, whatever location or kind 
of work one may select for first attention, he is apt to 
find after a certain amount of work, that further prog- 
ress there is unprofitable, until efficiencies have been 
brought up somewhere else. 

Conversely, if one were to search for a starting 
point where he could make a locally fimished job with- 
out creating any disturbance elsewhere, he would never 
begin at all. Neither can any fixed rule be given as to 
where to begin. 

As in the old game of jack-straws, it depends on 
how the sticks fall out of the box. The only way to 
begin is to pick out the one that seems most promising 
and drag it out with the least possible disturbance of 
the rest of the pile. 

This involves looking ahead to the results of one's 
work and preparing in advance to meet contingencies. 
This results in having at all times a tentative plan of 
work laid out ahead as far as it .can be forecast with 
any reasonable approximation to the facts; but such 
a plan is necessarily only tentative, and one should 
always be ready to recast it in the light of unexpected 
events, or of fuller knowledge. 

One therefore advances in efficiency work in a sort 
of spiral, getting all over the plant at every turn, and 
at every turn getting a little higher up in efficiency. 

Naturally, also, one attacks the crudest and grossest 
inefficiencies first, and the removal of these clears the 
way for more refined measures; just as, in working 
materials, one first takes the heavy roughing cuts, then 
takes lighter cuts, and at last puts on the finish. 

402. The selection of successive points of attack is 
the more important because the greatest possible con- 
centration of attention on every such point is neces- 



362 APPLYING EFFICIENCY PRINCIPLES 

sary wMle work is being done upon it. The organiza- 
tion is accustomed to the old methods and will, at 
least, keep them going in some fashion; but a new 
method, no matter how superior it may be, goes awk- 
wardly at first because of its unfamiliarity. Until the 
organization has become accustomed to the new, has 
mastered it, and is fully able to operate it, the effi- 
ciency force must give it very close attention. For 
these reasons, as in war, a mere holding force must be 
left where the situation is not critical, and the point 
selected for attack must be unitedly assaulted by all 
the remaining strength thus made available. 



THE END 



INDEX 

In this Index the reference numbers given are those of the Articles, 
or numbered sections of the book, in which the subject described by 
the index title is discussed. This system, rather than that of indexing 
by page numbers, seems to provide the better and fuller guide to the 
reader; but it happens that throughout much of the volume Article and 
page numbers run closely parallel. 



AKTICIiE 

Accidents — Causes of 167 

Adaptation 55, 146 

Adjustment account — Factory 376 

Aid— First 167, 259 

Altruism 266 

Analysis 17 

Analysis by principles of effi- 
ciency 16, 202 

Analysis file 108, 113 

Anticipative inspection. . .139, 162 

Appeal by staff 62 

Appraisal 139 

Assembly department. . . .122, 163 
Attack — Selection of point 

of 149, 394 

Authority 62, 64, 77 

Auxiliary operations 208, 210 



Bill of materials. . .113, 129, 221 

Board — Despatch 98 

Bonus 291 

Bonus on materials 302 

Bonus — Payment of 313 

Breakdowns — Prevention of . . 162 

Budget 184, 288 

Business fluctuations. 159, 375, 377 



ARTICLE 

Capacity — Departmental 112 

Capacity — Production equal to 

plant 159 

Card — Exception or allowance 

104, 151 
Cards— Service or job, 96, 119, 372 
Cards to foreman — Value of 

service 129 

Causes of accidents 167 

Causes of inefficiency — Tracing 134 
Chain of command. . . .51, 67, 278 

Chance 211 

Change of employees — Cost of 159 
Chief of staff — Eeports to . . . 136 
Classification of direct costs. . 351 
Classification of overhead ex- 
pense 351 

Cleanliness 155 

Command — Chain of... 51, 67, 278 

Committees 83 

Common sense 16, 22 

Competent counsel 58, 83, 223 

Concentration of attention. . . 402 

Condition — Mental 167 

Conditions — Adapting minor. 179 
Conditions — Investigation of. 150 
Conditions — Principal 153 



363 



364 



INDEX 



AKTICLE 

Conditions — Standardization 

of 147 

Control — Functional 77 

Correct method 166, 226 

Correct method — Determina- 
tion of 227 

Correction of standards 312 

Cost — Classification of direct. 351 

Cost diagram 341 

Cost— Elements of 322, 372 

Cost finding 333 

Cost flywheel 376 

Cost formula 224, 344, 373 

Cost of change of employees 159 
Cost of equipment — Distribu- 
tion of 363 

Cost of power — ^Distribution 

of 364 

Cost of rent — ^Distribution of 365 
Cost of supervision — Distribu- 
tion of 365 

Cost^-Standard ....224, 338, 376 

Cost system — ^Requisites of. . 336 
Cost — Temporary variations 

of 379 

Counsel— Competent ..58, 83, 223 

Damaged articles 121 

Deal— Fair 211, 254, 309 

Delays 104 

Demerit system 275 

Departmental capacity 112 

Departmental despatching 

97, 114, 119 

Depreciation 139, 348 

Despatch board 98, 101 

Despatching 14, 86, 127 

Despatching — ^Departmental 

97, 114, 119 

Despatching inspection 176 

Despatching movement of ma- 
terials 177 

Determination of efficiency... 316 



ARTICLE 

Diagram — Cost 341 

Direct cost 342 

Discipline 274 

Discontinuing old methods . . . 115 

Discretion 54, 112 

Distribution — Efficiency of 

325, 330, 331 
Distribution of overhead ex- 
pense 338, 356 

Division of labor 

21, 77, 159, 162, 166, 216 
Doctrine— Military. .28, 36, 57, 65 
Drawings 142, 156, 158 

Education — Vocational . . 242, 250 
Efficiency — Analysis by prin- 
ciples of 16, 202 

Efficiency — Determination of. 316 
Efficiency — Ethical principles 

of 6 

Efficiency— Factors of 324 

Efficiency — Local 125 

Efficiency of distribution 

325, 330, 331 
Efficiency of materials. . .331, 387 
Efficiency of overhead expense 332 
Efficiency of price.. 325, 329, 331 
Efficiency of supply. 325, 328, 331 

Efficiency of use 325, 327, 331 

Efficiency — Primary principles 

of 3 

Efficiency — Principles of 1 

Efficiency reward 281 

Efficiency reward for -direct 

workers 290 

Efficiency reward for execu- 
tives 184, 285 

Efficiency reward — ^Limitations 

of 315 

Efficiency staff 20, 61 

Elasticity of organization .... 159 

Elements of cost 322 

Employees — Cost of change of 159 



INDEX 



365 



ARTICLE 

Employees — Keeping 50 

Employees — Eecords of.43, 47, 275 
Employment — ^Permanence of. 35 
Employees — Selection of.. .41, 301 
Employment supervisor 

44, 252, 275 
Employment supervisor — Eec- 
ords kept by 44, 138 

Equipment 161 

Equipment — Distribution of 

cost of 363 

Equipment — Overhead on 370 

Equipment — Record of . . . 139, 152 
Equipment — Suitability of 

product to 158 

Ethical principles of efficiency 6 

Exception card 104 

Executives — Standards for... 184 
Expense. See Overhead Ex- 
pense. 
Experimental research 20 

Faie deal 211, 254, 309 

Fallacies 25, 81 

Eatigue 168, 206, 216 

File— Analysis 108, 113 

File records. 96, 103, 114, 121, 162 
Financial results — Estimating. 380 

Finding cost 333 

First aid 167, 259 

Fitness of workers 267, 308 

Fluctuations of business 

159, 375, 377 
Flywheel of costs — Surplus 

account as 376 

Foreman 'a responsibility for 

overhead expense 129 

Forma 86, 96 

Functional control 77 

General manager. 53, 56 

Graphs 131 



Height of work. 



ARTICLE 

... 172 



Ideals • . • 27 

Ideals in cost finding 335 

Idle time HI 

Illumination 169, 171 

Inefficiency — Symptoms of . . . . 13 
Inefficiency — • Tracing causes 

of 134 

Inspection 162, 176, 298 

Inspection — Anticipative. .139, 162 

Inspector 67 

Instruction 55, 226, 280, 307 

Instruction — Standard prac- 
tice 226, 236 

Instruments — Control by 164 

Instruments — ^Eecording 

106, 164, 211 

Interruptions 104 

Inventory 113 

Inventory — Perpetual 113 

Investigation of conditions. . 150 
Investigation — Preliminary . . 15 
Irregularities on bonus — Ef- 
fect of 297 

Keeping employees 50 

Labor — Division of 

159, 162, 166, 216 

Labor — Efficiency of 327 

Labor— Overhead on. 362, 367, 371 
Labor — Standard quality of . . 129 
Lackawanna R. R. — Circular of 30 

Ledger — Stock 113 

Lighting 169, 171 

Limits of stock 113 

Limitation of production 28 

Line organization 20, 60 

Local efficiency 125 

Location of plant 154 

Loitering 197 



366 



INDEX 



ARTIC1.E 

Long service — ^Reward for.., 305 

Loyalty 264, 280 

Luck 211 

Maintenance 162 

Malcontenta 270 

Manager — General 53, 56 

Manager — ^Reports to faxitory 132 
Manager — Eeports to general 132 

Materials 113, 174, 177, 398 

Materialfr— Bill of. . .113, 129, 221 

Materials — Bonus on 302 

Materials— Efficiency of.. 331, 387 

Materials — Overhead on 361 

Materials — ^Planning of 145 

Materials — Standards of 

129, 220, 302 

Materials — Study of 331 

Measure of Production — Stand- 
ard as 224 

Meeting — Planning 91 

Mental condition 167 

Method— Correct 166, 226 

Method — Determination of cor- 
rect 227 

Minor conditions — Adapting.. 179 

Monotony 166, 216 

Moral qualities 304 

Movement of materials 177 

Obedience 274 

Obsolescence 139 

Operation — Standardized. 159, 166 

Opposition to efficiency 306 

Order— Good 155 

Orders 52, 278 

Orders — Obedience to 274 

Orders — Size of 160 

Organization 51 

Organization diagram 66 

Organization — Elasticity of . . 159 

Organization — Staff 58 



AKTICLE 

Overhead expense 343, 374 

Classification of 351 

Distribution of 338, 356 

Efficiency of 332 

Foreman 's responsibility for 129 

On equipment 370 

On labor 362, 367, 371 

On materials 361 

Superintendent 's responsi- 
bility for 130 

Paets — Manufacture in stand- 
ard 156 

Payment of bonus. , 313 

Penalties 275 

Permanence of employment. . . 35 

Personnel 35,^ 75, 165, 397 

Piece rates 290, 300 

Pittsburgh & Lake Erie E. K. 27 

Plans — ^Records of 118 

Planning 14, 86, 127, 129 

Planning department 

102, 112, 114, 119 

Planning meeting 91 

Planning of materials 145 

Plant — ^Location of 154 

Power — ^Distribution of cost 

of 364 

Preliminary investigation .... 15 
Prevention of breakdowns... 162 
Price— Efficiency of.. 325, 329, 331 
Primary principles of efficiency 3 

Principles of efficiency 1 

Principles of efficiency — 

Analysis by 16, 202 

Principles of efficiency — Ethi- 
cal 6 

Principles of efficiency — ^Pri- 
mary 3 

Product — Permanence of 157 

Product to equipment — Suit- 
ability of 158 



INDEX 



367 



ARTICLE 

Product — Uniformity of 156 

Production equal to plant ca- 
pacity 159 

Production — Limitation of . . 28 
Production — Standard as meas- 
ure of 224 

Profit sharing 285 

Progressive assembly 163 

Promotion 37, 252, 273 

Propagation of ideals 33 

Psychology of workman 254 

Quality of labor and mate- 
rials — Standard 129 

Becords 53, 86 

Eecords for determination of 

bonus 297 

Records kept by employment 

supervisor 44, 138 

Records of employees. .43, 47, 275 

Record of equipment 139, 152 

Records of plans 118 

Recording instruments 106 

Reduction of sales price .... 393 

Rejections 121, 298 

Rent — ^Distribution of cost of 365 

Repair department 121 

Reports to chief of staff. . . . 136 

Reports to factory manager. . 132 

Reports to general manager . . 133 

Reports to superintendent.... 130 

Requisitions — Labor 96 

Requisitions — Material 114 

Research — Experimental 20 

Reservoir in planning. .. .123, 176 

Responsibility 62, 77 

Rest 173, 209, 216 

Results — Estimating financial. 380 

Reward — EflBciency 281 

Reward for direct workers — 

Efaciency 290 



ARTICLE 

Reward for executives — Effi- 
ciency 184, 285 

Reward — Limitations of effi- 
ciency 315 

Routing 149, 108 

Sabbath 173 

Safety 167, 171, 203 

Safety first 29 

Sales price — Reduction of . . . . 393 

Sanitation 167, 171, 263 

Schedules 108, 215 

School— Part time 246, 249 

Seasonal fluctuations 159 

Selection of employees .... 41, 301 
Selection of point of attack . . 394 

Service cards 96, 113, 119, 372 

Service cards to foremen- 
Value of 129 

Service — Reward for long. . . . 305 

Sharing— Profit 285 

Skill — Transfer of 226 

Specialization 21, 77 

Specifications ...24, 174, 176, 220 

Staff — Efficiency 61 

Staff organization 20, 58 

Staff — ^Reports to chief of 136 

Standards 129, 137, 181 

Standard as basis of fair deal 268 
Standard as measure of pro- 
duction 224 

Standards — Correction of . . . . 312 

Standard cost 224, 376 

Standards of materials. .220, 302 
Standard parts — Manufacture 

in 156 

Standard practice instruction 

226, 236 
Standard quality of labor and 

material 129 

Standard — Temporary 200 

Standard time — Dfitermination 

of .190, 195, 198, 208, 213, 218 



368 



INDEX 



ARTICLE 

Standard to workman — State- 
ment of 311 

Standardization of conditions 147 
Standardized operation. . .159, 166 
Starting efficiency reward. ... 310 

Study of materials 331 

Study— Time 188 

Suggestions 237 

Superintendent — ^Reports to . . 130 
Superintendent 's responsibil- 
ity for overhead expense 130 

Supervision — Cost of 365 

Supervisor — Employment 

44, 252, 275 
Supply — ^EflSciency of 

325, 328, 331 
Surplus account as flywheel of 

costs 376 

Symbolizing 109 

Sympathy 264 

Symptoms of inefficiency 13 

Synthesis 18 

Teacher of industrial proc- 
esses 230 

Team work 

28, 57, 65, 159, 264, 285, 314 

Temporary standard 200 

Theory. . .19, 21, 241, 244, 245, 250 



ARTICLE 

Time — ^Determination of stand- 

ard.190, 195, 198, 208, 213, 218 

Time— Idle Ill 

Time rates 290 

Time study 188 

Tracing causes of inefficiency 134 

Traditions 25 

Transfer of skill 226 

Troubles 12 

Trouble makers 270 

Understudies 252 

Use— Efficiency of. . .325, 327, 331 

Ventilation 168, 171 

Veto on selections by employ- 
ment supervisor 45 

Vocational education 242, 250 

Wages 262 

Warmth 170 

Waste of materials 220 

Welfare work 257 

Women 173, 248 

Work height 172 

Work— Welfare 257 

Workers— Fitness of 267, 308 

Workman — Psychology of 254 

Workman — Statement of stand- 
ard to 311 



W49 




■A^ '^ "'•••* V> •<y. '<>•** <0 Deacidified using the Bookkeeper process. 

fO .<*f6<» **. ^■^ ,•& i«'"JJ* "^^i /-O Neutralizing agent: Magnesium Oxide 

* '^Nltiik* j!* ^JFmC^* 'Kt. /• * Treatment Date: Aug. 2003 

►'i^l^* aP-Jt, '^.^^o JK<^^ t<x Pi'eservatmnTechnologies 

* '^^2^jP^* f\ -^ " tSIJ^^ *• W *■ * "'°'""'' '■^*°^'' "^ PAPER PRESERVATION 

C% t.-^-UAr ^.^ _^ ^ ^^^^ii^* -4''^ <V3 * 111 Thomson Park Drive 

^ " "* ^^'J' .. "C» * "^ -Cr >i» Cranberry Township. PA 16066 

<rie. -*? ^^l^m^* -^ "V *!.*.;?'' «!il (724)779-2111 












:^ 



♦ <f 









V^!^\/ ^^^'^Z ^<>.*^^\/ % 
/.^,A^v% .^*\*^:^/^-^^ o°^.l^^^^-o .^*\ 






^^\ BOOKBINDING |j ,0 ^ '^iJ^^o *^ ^ '^^^j^^* iP "'rf* «' 



t • o 



BOOKBINDING H ,0 •r»» •^W.MP*'^* < O^ 

March Apni 1989 ■ s ^S*. *^«JJNnS?'^ >. N #-\ 

ei ^^gV gcJi ^?V * • - O ' V^* * 



^ .-ftp .*J«OW% ^ 



